Definition of customer

1. DEFINITION OF CUSTOMER:-
Peter Drucker, a well known management expert, defined customers as:
A person who purchases the product from the marketer or from the
retailer or from the wholesaler.
Customer Profiling:-
Customer profile may be defined as customer description that includes
demographic, geographic and psychographic characteristics, buying
pattern, creditworthiness, purchase history etc. This description may
include information pertaining to the income level, Occupation, level of
education, age, gender, hobbies, and/or area of residence. For example,
magazine advertising salespeople provide advertisers with customer
profiles describing the type of person who will be exposed to the
advertisements in that magazine. The description may include income,
occupation, level of income, occupation, level of education, age, gender,
hobbies, area of residence etc.
These customer profiles which are built by the companies help them to
understand their customers better. Using this customer profile the
companies are able to identify and segment their potential customers.

What is customer satisfaction?

2. Customer satisfaction refers to the extent to which customers are happy
with the products and services provided by a business. And can be
measured using survey techniques and questionnaires. Gaining high
levels of customer satisfaction is very important to a business because
satisfied customers are most likely to be loyal and to make repeat orders
and to use a wide range of services offered by a business.

According to Dr. Philip Kotler:
“Customer satisfaction occurs when the perception of the reward from the
purchase of goods or services by the customer meets or exceeds his/her
perceived sacrifice. The perception is a consequence of matching past
purchase and consumption experience with the current purchase.

Why is Customer Satisfaction So Important?

A customer is satisfied only when he is getting quality product and
quality service which he perceives. If a company is able to provide both,
this will lead to customer satisfaction. A satisfied customer will develop
loyalty towards the company and will buy product of same company
again and again. At the same time he will recommend company's product
to others. This will help company in getting new customers. As a result
company's sale will increase and profits will rise.

Dissatisfied customer on an average will tell 12 others not to buy a

3. product of the company. With internet and other information technology
tools this number could go up to 10,000.
This will affect the image of the company and will result in loss of sale
and profit.
The cost of acquiring new customer is 5 times more than keeping the old
one. The old customer will remain with a company only if they are
satisfied with the services provided by the company.
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If a customer has a major complaint, 91 % of such customers will not
buy from the company again. If the problem is resolved quickly, 82% of
them will return. So a company should see that it is able to meet
expectations of each and every customer and should not delay in solving
customer's complaint.

PURPOSE OF CUSTOMER SATISFACTION
"Customer satisfaction provides a leading indicator of consumer
purchase intentions and loyalty." "Customer satisfaction data are among
the most frequently collected indicators of market perceptions. Their
principal use is twofold:"
1. "Within organizations, the collection, analysis and dissemination of these
data send a message about the importance of tending to customers and
ensuring that they have a positive experience with the company’s goods
and services.
2. "Although sales or market share can indicate how well a firm is

4. performing currently, satisfaction is perhaps the best indicator of how
likely it is that the firm’s customers will make further purchases in the
future. Much research has focused on the relationship between customer
satisfaction and retention. Studies indicate that the ramifications of
satisfaction are most Strong realized at the extremes." On a five-point
scale, "individuals who rate their satisfaction level as '5' are likely to
become return customers and might even evangelize for the firm. (A
second important metric related to satisfaction is willingness to
recommend. This metric is defined as "The percentage of surveyed
customers who indicate that they would recommend a brand to friends."
When a customer is satisfied with a product, he or she might recommend
it to friends, relatives and colleagues. This can be a powerful marketing
advantage.) "Individuals who rate their satisfaction level as '1,' by
contrast, are unlikely to return. Further, they can hurt the firm by
making negative comments about it to prospective customers.
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Willingness to recommend is a key metric relating to customer
satisfaction."

Customer Perceived Value (CPV):-
Consumers are more educated and informed than ever, and they have
the tools to verify companies’ claims and seek out superior alternatives.
Customer-perceived value is the difference between the prospective
customer’s evaluation of all the benefits and all the costs of an offering

5. and the perceived alternatives. Total customer benefit is perceived
monetary value of the bundle of economic, functional, and psychological
benefits customer expect from a given marketing because of the product,
services, personnel, and image involved. Total customer cost is the
perceived bundle of costs customers expect to incur in evaluating,
obtaining, using, and disposing of the given market offering, including
monetary, time, energy, and psychological costs.
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CPV is thus based on the difference between what the customer gets and
what he or she gives for different possible choices. The customer gets
benefits and assume cost. The marketer can increase the value of the
customer offering by some combination of raising economic, functional,
or emotional benefits and/or reducing one or more of the various types of
costs. The customer choosing between two value offering.
 Applying Value Concept: Very often, managers conduct a customer
value analysis to reveal the company’s strengths and weaknesses
relative to those of various competitors. The steps in the analysis are
as follows.
 Identify the major attributes and benefits that customer value
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 Assess the quantitative importance of the different attributes and

6. benefits
 Assess the company’s and competitor’s performances on the different
customer value against their related importance
 Examine how customer in a specific segment rate the company’s
performance against a specific major competitor on an attribute or
benefit bases.
 Monitor customer values over time
 Choices and Implications: Some marketers might argue that the
process we have described is to rational. Suppose the customer
chooses the product. How can we explain this choices? Here are three
possibilities
 The buyer might be under orders to buy at the lowest price
 The buyer will retire before the company realize that the product is
more expensive to operate
 The buyer enjoys a long-term friendship with the salesperson
CPV is a useful framework that applies to many situations and yields
rich insights. Here are its implications:
 First, the seller must assess the total customer benefit and total
customer cost associated with each competitors associated with each
competitor’s offer in order to know how his or her offer rates in the
buyer’s mind.
 Second, the seller who is at a CPV disadvantages has two alternatives:
to increase total customer benefit or to decrease total customer cost.
The former calls for strengthening or augmenting the economical,
functional, and psychological benefits of the offering’s product,

7. services, personnel, and image. The latter calls for reducing the
buyer’s cost by reducing the price or costs of ownership and
maintenance, simplifying the ordering and delivery process, or
absorbing some buyer risk by offering a warranty.
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 Delivering High Customer Value:- Consumers have varying degrees
of loyalty to specific brands, stores, and companies. The value-delivering system includes all the
experiences the customer will have
on the way to obtaining and using the offering. At the heart of a good
value delivery system is a set of core business processes that help to
deliver distinctive consumer value.