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2017 | OriginalPaper | Buchkapitel

2. Strategic Action: Four Elements for Increasing the Effectiveness of Marketing Actions

verfasst von : Mauro Cavallone

Erschienen in: Marketing and Customer Loyalty

Verlag: Springer International Publishing

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Abstract

The second chapter concentrates on strategic action and on the ways to increase customer loyalty and refers to: • two points linked to the uniqueness of the offer and the dynamics for managing the competitive advantage; • the four steps leading from the purchase to customer loyalty; • the analyses of the performance of and on the customer; • four methods for developing customer loyalty. These elements define the strategic action, understood as the fulfilment of the activities carried out to achieve customer hyper-loyalty. Such activities contain, in the way they present themselves, elements linked to the strategy underpinning them. To ensure the effectiveness of every marketing action, it is crucial to know and analyse the four steps (purchase, repeat purchase, retention, loyalty) that form the path leading from the purchase to loyalty as presented below. The objective stated is two-fold: on one side it is to analyse every single component as having its own significance; on the other, it is to identify, where possible, a common theme that is logical as far as content is concerned and sequential with regard to process and which defines the path followed by the “steps”.

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Vorheriges Kapitel A Brief History of Marketing—65-Years of Journey from 1948 to 2013

Nächstes Kapitel TES Marketing

The question summarises in a few words the philosophical problem of self-knowledge which has been tackled at various times throughout the history of the discipline.

Bellucci, Andrea. Strategia, gestione del rischio e creazione di valore nelle imprese assicurative. Vol. 33. G Giappichelli Editore 2014.

The concept will be examined in depth in the third chapter.

Smith (1956).

The concept of uniqueness, in terms of differentiation compared with one’s competitors, was introduced in 1961 in the field of advertising by Rosser Reeves who proposed the notion of Unique Selling Proposition to describe an advertising technique capable of emphasising not the characteristics of the product, but its differences compared with those of the competitors. Such a concept, considered more generally on the level of marketing, outlines a consumer-oriented strategy, capable of differentiating one’s own product/service from that of the competitors (Bungey 1997). The uniqueness of one’s offer—in terms of marketing mix, positioning and brand ingredients (Kotler and Pfoertsch 2010)—is, in fact, considered by Porter (1990) as a primary source of competitive advantage.

Herrmann et al. (2000).

According to the well-known theory of Maslow (1954), human needs present a pyramidal hierarchical order and, from the bottom up they are classified as: physiological (hunger, thirst); safety (safety, protection); social (sense of belonging, affection); esteem (self-esteem, recognition, status); self-realisation (development and self realisation).

Murray’s classification reports both negative needs such as humiliation, deference, insecurity, aggressiveness, as well as positive ones such as success, autonomy, opposition, solidarity, order, sensitivity, safety, understanding, and also “different” needs, such as dominion, exhibition, avoiding evil, play, sex.

McGuire subdivides needs into external and internal or non-social as they are linked to the individual’s relationship with other people. Amongst internal needs McGuire includes: consistency, fortuity, categorisation, interpretation, independence, curiosity, idealisation, usefulness, reduction of tension; the external ones include self-expression, defence of the ego, assertiveness, support, affiliation, identification, imitation.

Quotation from Crystal Reference (http://www.crystalreference.com); in Dutch: kopen; in French: acheter; in English: buy; in German: kaufen; in Spanish: comprar.

With reference to impulse buying, reference should be made to the meta-analysis recently performed by Amos et al. (2014).

Busacca (2004) states that “all the awareness (consisting of the trademarks that the consumer recognises) and the elements evoked (consisting of the alternatives representing the choice) are, basically, stable, giving rise to crystallised behaviours or ones that are, in any case, repetitive and reiterated in a marked simplification of the process”.

In fact, the purchase features a sudden and hedonically complex process in which the rapidity of the impulse buy precludes all rational evaluation (Sharma et al. 2010). More precisely, the authors (op. cit., p. 277) consider the impulse buy “as a sudden, hedonically complex purchase behavior in which the rapidity of the impulse purchase precludes any thoughtful, deliberate consideration of alternative or future implications”.

Marino (2006, p. 268) affirms that “every proposition represents a proposal (coherent with the positioning) that the firm implements vis-à-vis the individual “customer-demand” pairs on which it decides to operate”.

The attributes “are directly perceivable characteristics linked to the product and represent the direct source of utility of the consumer” (Dalli and Romani 2000, p. 87), while the benefits are “the desirable consequences associated with the purchase and the use of the product” (Dalli and Romani 2000, p. 90).

These are linked both to the decisions taken in situations of uncertainty (for example the same product/brand is purchased again due to a lack of information about the competition or for fear of not obtaining the same mix of performance for the same investment), or in cases in which the customer does not have concrete or reassuring information about a potential alternative choice; both elements impact on the concept of cognitive dissonance referred to by Festinger (1957) linked to post purchase changes of mind.

In the matrix mentioned, Busacca places the vector “Novelty” on the axes on one side, referring to a new purchase, modified repurchase and unvaried repurchase and on the other side the “Learning” vector divided into high, average, low.

As far back as 1988, Kotler theorised a new approach to marketing, the so-called social marketing whose objective is to pursue the firm’s success in order to preserve the well-being of both the customer and of the firm simultaneously. As the segment of consumers was growing, Kotler asked himself whether in fact any firm could achieve customer satisfaction by aiming exclusively at its own profit or whether it was necessary to incorporate the consumers’ needs. Analogously, Ketilson (1990) emphasised cooperation as a fundamental element for building customer satisfaction.

On this topic, see Busacca (2004) and Valdani and Busacca (2004). Eggert and Ulaga (2002).

Holloway states in his list: organise (and circulate) reasonable and consistent expectations of service for the initial contact; keep every customer informed of developments in solving a problem; organise one day dedicated to service; satisfy and exceed the customer’s expectations; define the problems rationally; give the customer the right solution to the problem in good time; urge the customer to make suggestions; reply to complaints directly and quickly.

Again linked to the theme of internal organisation, Johnson and Gustafsson (2003) describe in their work a set of systems for measuring satisfaction based on the model: internal quality → external quality and satisfaction → loyalty and customer retention → financial performance, in line with what was stated by Hill et al. in their work (2003).

Ehrenberg (1988), for example, confirms that most families are loyal to several brands which, as basic and general commodities, they consider to be alternatives to each other or they buy them when they are on special offer.

From their study, it emerges that exposure of an individual to a “disloyal” social network increases the probability of infidelity by 80% (Nitzan and Libai 2011).

See also Harher and Egan (2006).

Reichheld and Sassel (1990) report that the ability to retain 5% more of one’s customers a year may even enable the company to double their profits. For this reason, the so-called Defection Management, which is aimed at anticipating and avoiding abandonment by the clientele, must be adopted to the full.

Ranaweera and Prabhu (2003).

According to Curry and Meacci (1999) CRM lies in the widest approach to customer marketing, whose objective is to identify, acquire, retain and increase customers. This approach uses the customer database and defines the integrated mix of sales techniques and communication methods suitable for achieving the objectives with the customer and measuring in figures the results of the efforts undertaken commercially. More specifically, the customers’ database created by means of CRM, contains the following key information on both actual and potential customers:

the characteristics and identity of the customer;
products purchased, requests, interests;
RFM factors, that is Recency (when the customer purchased the last time), Frequency (how many times the customer purchased for example the year before), Monetary (how much the customer spent all together);
means of communication that influenced the transaction;
history of the relationship with the customer.

Furthermore, it appears evident that CRM that aims at customer loyalty has to go beyond the collection of data and strive for an emotional involvement of the customer.

The same authors detail the operative process of CRM in seven successive passages: understand the consumers; classify the consumers; deliver value to the priority consumers; focus on the strategic abilities; create client-centric strategies; select the software for the CRM; implement the CRM strategy.

Bowen and Chen (2001).

It can be observed how the second component, preference, takes account of the phenomenon of multiple loyalty to several brands (East et al. 2013) and, on this matter, it is obvious that loyalty will be more easily “exclusive” in the short term in correspondence with a lower number of purchases.

Given that the accumulation of individual experiences of satisfaction may determine the conditions for actually achieving customer loyalty, the company’s commitment must be turned towards creating continual experiences of satisfaction, in other words moments in which the customer perceives that he has obtained from the supplier a value/price ratio that is higher than that obtainable from any other supplier (Busacca 2002).

After the reference to the pioneering studies of Krugman in the period 1965–1967, Busacca (2004) refers to the following as being fundamental for involvement: (A) the importance attributed to the product and/or to a specific brand; (B) the degree of risk perceived; (C) the social visibility of the product; (D) the context of use of the product and he concludes by affirming that “as the level of psychological involvement grows so the buying effort that the consumer is willing to make also increases”.

Furthermore, Tassinari states that loyalty is determined by three causes: satisfaction, customer motivation, the ability of the subject to develop an elaborate evaluative process of the brand.

This may for example be obtained by applying experiential marketing approaches (Collesei 2006; Ferraresi and Schmitt 2006; Wang 2014).

One of the ways that the Ancient Romans ended their missives was cura ut valeas literally meaning “keep well”, “take care of yourself” linked to “concern” in a positive sense (as a wish) about the future health/status of the person.

Various authors have tried to define the stages marking the relationship between company and customer. The study by Dwyer et al. (1987) describes five phases of the relationship: the first is that of awareness, followed by the phase of exploration, in which the buyer develops an avenue of learning by trial and error; the third phase is the one of expansion in which the interdependence between buyer and seller tends to develop and, consequently, also the lock-in increases for the parties in the relationship; the fourth phase is that of commitment, during which the buyer remains anchored to the choices that he has made, although he is aware of the opportunities available on the market; the final phase is the one defined as the dissolution of the relationship which presupposes the withdrawal of at least one of the two parties concerned and which may occur in all the phases previously examined, even if, as the relationship evolves, the dissolution tends to become more costly in view of the idiosyncratic investments made by both parties.

As an integration of this model, Wilson (1995) provides an interpretive contribution in which he highlights and isolates the relevant variables in each of the phases of the life cycle of the relationship, in the direction of a systematisation of the correlations existing between specific instrumental variables and consequences in the individual phases. In particular, the author highlights the existence of five moments:

seeking and selecting the supplier-partner: reputation, satisfaction and trust;

definition of the setting of the relationship: element of trust, convergence between the objectives of the parties so as to encourage the integration and common purpose of the respective competences;

definition of the boundaries of the interaction: in the face of reciprocal undertakings and commitment, the counterparts study the real opportunities for interaction and co-development in the light of the awareness of the reciprocal resources involved in the relationship;

value creation: dependency, power and influence that characterise the relationship between the two parties in question;

maintenance: moment of stability in which the dimension of the involvement and the cooperation between the parties assume importance.

These tools include:

Usability of the website: it means increasing the ease with which the website can be surfed even by non-expert users.
Useful information for the customer-user: buying and payment conditions; terms of delivery; rights and duties of the buyer; actions and advice.
E-mail: it represents “the customers’ voice” par excellence, insofar as it allows them to contact the company directly and express an opinion or a complaint or ask for further information or advice.
Newsgroup: these are comparable to forums in which the customer can interact with an operator and/or with other customers, thus guaranteeing an enormous resource of technical advice and assistance.
Newsletter: this newsletter is distributed by the company every so often by email to its customers registered on the database and it allows a close and effective relationship to be maintained without appearing invasive.
FAQs (Frequently Asked Questions): this involves publishing customers’ most commonly asked questions on the website together with the answers with the advantage of preventing customers from having to hold the line for a long time waiting for an answer or having to make contact by email.
Chat: it is a “room” for communication between the company and its customers that can provide rapid technical assistance, reduced handling costs and solutions to problems shared by several customers.
Blog (abbreviation for weblog, literally “a page published on the web”): it represents an instrument for providing suggestions, solving practical problems, receiving feedback and modifying the perception that the market has of a certain product or of the company in general. Blogs allow anyone to express their own point of view and at the same time they create a phenomenon of interaction between customers and the company, going beyond cold and formalised relationships and involving a highly personal component.

McNary (2005) states the ways for converting satisfaction into loyalty: the fundamental element for building customer loyalty consists in strengthening the relationship not only by means of a very high level of satisfaction, but by delighting the customers. On this matter see also George and Stanton (2005).

An analysis of two cases performed in 2002 in the travel sector attempted to establish whether the levels of satisfaction and loyalty for the same service are different as a result of the customer choosing the on-line or off-line method. It emerged that, while the level of customer satisfaction for a service chosen on-line is the same as that chosen off-line, loyalty towards the provider of the service is higher when the service is chosen on-line. Furthermore, a closer relationship was highlighted between general satisfaction and loyalty in the case of on-line interaction. These results suggest that, contrary to popular belief, the on-line means can help companies to build a base of loyal customers. On this matter see Venkatesh et al. (2002).

Cozzi and Ferrero (2004, pp. 244–245) state that customer equity “is conditioned by: the duration of the relationship, the customer’s characteristics, the possibility of increasing the purchases, the costs of customer management and loyalty, the discounting rate applied. [Furthermore they state] it is the concept of retention equity as represented by the bonds established between the buyer and the company that contribute towards retaining brand loyalty regardless of the objective and subjective assessments of the differential benefit offered”.

Reference should be made to the subjects of buying and value creation for the customer.

Olson and Reynolds suggest the difference between concrete attributes that are mainly unidimensional, objectively measurable and connected directly to the intrinsic characteristics of the product and abstract attributes that are mainly multi-dimensional, not objectively measurable and independent of the physical characteristics of the product.

The emotional aspect concerns the set of strategies that aim to pursue the deep involvement of the consumer (Ferrari 2014). As defined by Kotler (2010), it considers those messages directed at the heart, in other words at the client’s emotions and plays an important role both in the buying decisions and in determining the brand value on the market.

In accordance with Addis (2007), by experiential aspect reference is made to the set of strategies targeted at creating the emotions the company wishes the consumer to experience, in line with its profile and the position of the brand. The experience must include all the key factors for transferring value for the customer and the fundamental drivers for creating a lasting relationship with him, but at the same time, it must show itself to be indissoluble, so that the single elements cannot be easily pinpointed or separable (Addis 2007).

The so-called means-end chain was introduced by Zeithaml in 1988 and then developed by scholars such as Olson and Reynolds (1983, 2001, pp. 10–11) who defined it as “a conceptual framework for understanding how consumers use choice criteria in the decision process and a methodology for identifying those factors” and “the means-end approach can identify what choice criteria are used by consumers to evaluate and select among choice alternatives”.

On this matter, see the previous chapter under the heading “involvement”.

According to the author’s approach, the multivoting procedure allows a good level of meaningfulness accompanied by a relative simplicity of implementation. In literature, the four most well-known methodologies for defining choice criteria linked to attributes or key purchasing factors refer to conjunctive, disjunctive and lexicographic procedures and to those suggested by Fishbein (1975) which can be used as an alternative to the multivoting one mentioned here.

This technique has lately taken great steps forward thanks to the work of Voeth et al. (2013) who, in their study validated the possibility of pinpointing the structure in order to examine consumers’ insights even more deeply and create customised products in line with today’s market requirements and the needs of individual buyers.

When it is measured using investigative tools (e.g., SERVQUAL).

Understood here as the perception of the ratio between what is expected and what is received.

Reference is made to the concept of “dynamic advantage” (Teece et al. 1997; Schilke 2014) and rolling competitive advantage (Cavallone 1990), in other words the firm’s ability to create differential and dynamic/continuative competitive advantages in order to maintain a concrete distance between the firm’s own position and that of the competition.

In accordance with the provisions of the SERVQUAL model by Parasuraman et al. (1985) and subsequent processing by Valdani and Busacca (1992), these gaps are referable to five categories: value gap, concordance gap perception gap, alignment and involvement gap, design and/or manufacture gap.

Various revisions of the definitions of customer lifetime value are presented in the works of Hwang et al. (2004) and Estrella-Ramón et al. (2013).

The penetration index consists of the share of sales achieved by the supplier to the clientele he serves in his commodity sector; in order to obtain the market share, this index must be multiplied by the weighted average, in other words by the market share of the distributors dealing with the products in question. For further insights, see Lugli and Pellegrini (2002).

By the term cross-selling reference is made to “the increase of the range of products sold” (Cozzi and Ferrero 2004, p. 172) to the customer; it must be distinguished from up-selling which refers to “increasing the market share with the customer” (Cozzi and Ferrero 2004, p. 172).

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Titel: Strategic Action: Four Elements for Increasing the Effectiveness of Marketing Actions
verfasst von: Mauro Cavallone
Verlag: Springer International Publishing
Buch: Marketing and Customer Loyalty
Print ISBN: 978-3-319-51990-6

Electronic ISBN: 978-3-319-51991-3

Copyright-Jahr: 2017
DOI: https://doi.org/10.1007/978-3-319-51991-3_2