Over time the cause-and-effect of strategies to increased retention, get reflected in the metrics and KPIs that are rolled up into a single balanced scorecard. All of these metrics also are used for defining the second step in the process the book promotes, which is defining the causes of attrition and working to alleviate them.
The most difficult aspect of customer retention strategies and minimizing the defection rate is equating attrition to lost profits (Wright, Riebe, 2010). Measures of lifetime customer profitability are difficult to accurately define and measure over time (Wright, Riebe, 2010). The majority of companies attain the first two of these three steps yet stop short of being able to capture lost profits due to attrition (Wright, Riebe, 2010). Only in those industries where there are exceptionally high levels of churn, for example with cable television and cellular phone providers, can the profitability be assessed per customer, including lost profits from attrition. In the highly commoditized industries where contract sizes are comparable across a given segment of residential or business service subscribers, the extrapolation of lost profits is easier to accomplish.
The VALS segmentation system has evolved into an 8-part typology. List and briefly describe any four categories of that 8-part typology.
The Values, Attitudes, and Lifestyles (VALS) segmentation model defines eight roles that are aligned to ideals, achievement, and self-expression. Anchoring the VALS segmentation model are Innovators and Survivors (Winters, 1992). Each of these primary motivation areas of ideals, achievement, and self-expression also has two addition roles each. In the Ideals segment, there are thinkers and believers. In the achievement section, there are achievers and strivers. In the self-expression section, there are experiencers and makers (Dunne, 2006).
The categories of innovators, achievers, strivers, and experiencers are briefly explained here. Beginning with the innovator who is considered the group leading change and motivated by a strong sense of independence, innovators are also more focused on continual learning. Innovators are considered to have a high level of resources to support their initiatives for independence and self-expression. Achievers are the next group and these are what many consider the backbone of societies. They are focused on work-driven satisfaction and seek the status quo. They are also politically conservative and respect authority and the status quo. Strivers are a lower-resource group that the Achievers, which is the group they emulate the majority of the time. Strivers also tend to be a lower-resource group and concentrate on aspirant-based purchases over time as well, wanting to emulate Achievers and Innovators. The Experiencers are most motivated by self-expression and are one of the youngest groups with a median age of 25. They are the classic early adopters of any product or service and seek to define themselves by their activities first, their possessions second.
According to the BRANDZ model of brand strength, brand building involves a series of five sequential steps. List and describe those five sequential steps?
The five sequential steps of the BRANDZ methodology include first building presence, then relevance, followed by performance. The top two that follow this foundation are advantage and bonding. The five layers of the BRANDZ Model replicate the processes consumers rely on to gain trust in companies and their brands (Seddon, 2010). It has been shown through studies that purchasing loyalty increases the higher up on the pyramid or structure a consumer attains (Koll, von Wallpach, 2009). The first level of the model is presence, which is defined as having an active familiarity with the product or service and in-depth understanding of the brand promise (Seddon, 2010). The next phase is relevance where the customers' salient points are taken into account, including the price range of interest, to recommend specific products of interest. The performance phase is where the initial expectations of a customer are either met or not depending on their experience with the product. The advantage stage measures the emotional or rational advantage of the product of interest over other brands in its same category (Seddon, 2010). The final stage is bonding or customer loyalty, which is the level that trust occurs. This is comparable to the level of brand loyalty that customers who automatically choose a given product in a store or perpetually purchase the same from the same auto manufacturers over time (Woodside, Walser, 2006). These five sequential steps also reflect a maturity model of trust between a company and its customers. Only by moving customers up the hierarchy quickly can lasting trust and loyalty be attained. Advanced implementations of the BRANDXZ model quantify the number and satisfaction level of customers by level of the hierarchy at any point in time.
Like products, markets evolve through four stages. What are those four stages? Characterize each stage of a market's evolution.
The four stages a product evolves through are often called the product life cycle (De Beir, Fodha, Magris, 2010). These are defined as the introduction, growth, maturity and decline stages of a product's life. Much research has been done on what motivates consumers to move from being early adopters to becoming mainstream consumers for a product. Excellent research was completed on high tech products by Geoffrey Moore, who wrote Crossing the Chasm to explain his findings of this analysis, which explains this dynamic of early adopters being the catalyst of growth (Mandel, 2004). The introduction phase of a product's life is when it is launched, and initially encounters competition in the market. As many companies do not pre-market test their products, this phase is when the actual marketability of the product is tested. The second phase is the growth stage, which is where the product eventually gains market share through a variety of marketing, promotion, pricing and sales strategies aimed at maximizing its revenue. The growth stage is successful to the extend there is strong support from the standpoint of product differentiation as well. The third stage is often the most challenging to manage a product through. This is the maturity stage and includes market, product and marketing mix modifications to streategies. The final phase is the decline stage. This is the stage in the product lifecycle where the next generation product is introduced and the previous generation product is discontinued. This is a phase in the produce life cycle known for exceptionally low prices to move previous generation products through distribution channels. This is also the phase of a products' life where foreign markets are looked at as viable markets to sell large amounts of inventory into to close out a product line.