【正文】 s to help the pany win through total quality excellence.2) Second, they must deliver marketing quality alongside production quality.Total Quality ManagementA) Total quality management (TQM) is an organizationwide approach to continuously improve the quality of all the organization’s processes, products, and services. Review Key Definition here: total quality managementB) Product and service quality, customer satisfaction, and pany profitability are intimately connected. C) TQM ran into implementation problems as firms became overly focused on how they were doing business and not the why they were in business. Companies lost sight of consumer needs and wants.D) Companies are now concentrating efforts on “return on quality” or ROQ.E) ROQ advocates improving quality only on those dimensions that produce tangible customer benefits, lower costs, or increased sales. F) Marketers play several roles in helping their panies define and deliver highquality goods and services to target customers.1) They bear the major responsibility for correctly identifying the customers’ needs and requirements.2) They must municate customer expectations properly to product designers.3) They must check that customers’ orders are filled correctly and on time.4) They must make sure that customers have received proper instructions, training, and technical assistance in the use of the product.5) They must stay in touch with customers after the sale to ensure that they are satisfied and remain satisfied.6) They must gather customer ideas for product and service improvements and convey them to the appropriate departments.MAXIMIZING CUSTOMER LIFETIME VALUE Marketing is the art of attracting and keeping profitable customers. A) The 80/20 rule states that the top 20 percent of the customers may generate as much as 80 percent of the pany’s profits.B) Suggests amending the rule to read 208030, to reflect the idea that the top 20 percent of customers generate 80 percent of the pany’s profits, half of which are lost serving the bottom 30 percent of unprofitable customers.1) The implication is that a pany could improve its profits by “firing” its worst customers.Customer Profitability A) A profitable customer is a person, household, or pany that over time yields a revenue stream that exceeds by an acceptable amount the pany’s cost stream of attracting, selling, and servicing that customer.B) Customer profitability can be assessed individually, by market segment, or by channel. C) Most panies fail to measure individual customer profitability.Customer Profitability Analysis Figure shows a profitability analysis. A) Customer 1 is very profitable.B) Customer 2 is mixed profitability.C) Customer 3 is a losing customer.1) What can the pany do about customers 2 and 3?a. It can raise the price of its less profitable products or eliminate them.b. It can try to sell them its profitmaking products.c. It can encourage customer 3 to switch to petitors.D) Customer profitability analysis (CPA) is best conducted with the tools of an accounting technique called ActivityBased Costing (ABC).1) Platinum customers (most profitable).2) Gold customers (profitable).3) Iron customers (low profitability but desirable).4) Lead customers (unprofitable and undesirable).Competitive Advantage Competitive advantage is a pany’s ability to perform in one or more ways that petitors cannot or will not match. Review Key Definition here: petitive advantage A) Michael Porter urged panies to build a sustainable petitive advantage.B) Few petitive advantages are sustainable, at best they may be leverageable.1) A leverageable advantage is one that a pany can use as a springboard to new advantages.2) Any petitive advantage must be seen by customers as a customer advantage. Measuring Customer Lifetime Value Customer Lifetime Value (CLV) describes the net present value of the stream of future profits expected over the customer’s lifetime purchases. Review Key Definition here: customer lifetime valueA) CLV calculations provide a formal quantitative framework for planning customer investment and helps marketers to adopt a longterm perspective.Customer Equity Customer equity is the total of the discounted lifetime values of all of the firm’s customers. Review Key Definition here: customer equityA) Rust, Zeithaml, and Lemon distinguish three drivers of customer equity: 1) Value equity: Is the customer’s objective assessment of the utility of an offering based on perceptions of its benefits relative to its costs?a. The subdrivers of value equity are quality, price, and convenience.2) Brand equity: Is the customer’s subjective and intangible assessment of the brand, above and beyond its objectively perceived value?a. The subdrivers of brand equity are customer brand awareness, customer attitude toward the brand, and customer perception of brand ethics.3) Relationship equity: Is the customer’s tendency to stick with the brand, above and beyond objective and subjective assessments of its worth?a. Subdrivers of relationship equity include loyalty programs, special recognition and treatment programs, munity building programs, and knowledgebuilding programs.B) This formulation integrates value management, brand management, and relationship management within a customercentered focus. C) Blattberg, Getz, and Thomas view customer equity as driven by three ponents:1) Acquisition.2) Is the function of the efficiency of addon selling, the number of addon selling offers given to existing.a. Is affected by the number of prospects, probability of a prospect, and spending per prospect.3) Retention.a. Is influenced by the retention rate and retention spending level.b. Addonselling customers and the response rate to new offers.D) Marketing equity represents a promising approach to marke