Customer Centric Marketing

Topics: Marketing, Customer relationship management, Customer service Pages: 31 (3123 words) Published: January 9, 2013
Customer Centric Marketing

Prof. Barak Libai


Prof. Barak Libai


Prof. Barak Libai


Prof. Barak Libai


“Technology is creating a radical new business model that alters the whole dynamic of customer service “

And Marketing in general

Prof. Barak Libai



How the customer centric view is becoming essential in modern marketing Customer profitability analysis

Prof. Barak Libai


A historical view of marketing

The product is the center of the marketing activity:

Emphasis on customer acquisition and market share

Prof. Barak Libai


Classic product–based marketing flow
Which relevant similar groups can we identify in the market ?



Which group(s) will we go after ? How do we want to be perceived in this market compared to our competitors?

Marketing Mix (4 P’s)

Product Price Promotion Place
Prof. Barak Libai

Quality, service, brand Demand based pricing Advertising, sales management, direct marketing Channels of distribution


The 1990’s

“Commodization”- stiffer competition and weaker productbased differentiation Information systems- faster, cheaper, can store more and collect more information Internet

Service economy- we know who you are
Initial findings from financial services- a high concentration of profits among customers Prof. Barak Libai 9

The profit distribution of a west coast US bank

Prof. Barak Libai


The resulta move towards the customer as a unit of analysis

Prof. Barak Libai


At the end of the 1990’s a new buzzword appeared:

CRM (Customer Relationship Management)
To become one of the most important areas of attention for managers

The Economist,

April 7 2005

Prof. Barak Libai


Today some of us talk more about Customer Centric Marketing (CCM) The management of business processes whose aim is to increase the long term profit of the firm’s customers by proper management of customer interactions at the individual customer level 

Such policy should be typically supported by information systems 

But the information systems are just a tool, not the strategy!

Prof. Barak Libai


How marketing is becoming “customer centric”.
• In the past- mostly market level measures
• For example, “Market Share” – What is the part of my company in the overall sales in the category

• Today – more individual level measures
• For example, Share of Wallet – What is the part of a brand in a customer’s purchases in a category

Prof. Barak Libai


In the past- short term view- managing “transactions”

Today longer range view: managing a relationship

We may be willing to lose today to profit in the longer run

Prof. Barak Libai


In the past – which customers can I get to buy my product

Today – what products can I get for my customer

Prof. Barak Libai


In the past – strategies to manage products
The “marketing mix”

Today – also strategies to manage customers
The “customer mix”

•Price •Promotion •Place

Customer Acquisition

Get new customers

Customer Development

Make more money from existing customers
Retain existing customers

Customer Retention

Prof. Barak Libai

In the past – managing a product over time

Today – Also, managing a customer over time

Prof. Barak Libai


In the past – all customer are created equal

Today – customers as “assets”

Recognizing the difference in profitability among customers

Prof. Barak Libai


Two main measures for customer profitability

Customer Lifetime Value (CLV)- The future profitability of an individual customer

Customer Equity- The future profitability of all customers: sum of customer lifetime values Prof. Barak Libai


The road to customer equity
Customer Acquisition

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