customer life time value, customer equity & buyer decision process

8/11/2019 Customer life time value, Customer Equity & Buyer Decision Process

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Assignment on: Customer life time value, CustomerEquity & Buyer Decision Process

Course Name: Principles of MarketingCourse Code: 4203

Submitted To:

Ms. Sadia AfrozeAssistant ProfessorDepartment of AIS

Faculty of Business AdministrationUniversity of Dhaka

Submitted By:

Md. Sharif Hassan

ID: 11427024

Date of Submission: June 13, 2014.


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Question1: Companies want to capture customer life time values and build customer

equity. Explain two concepts and how do marketers build such customer equity.

Answer1:

Customer life time value means the value of the entire stream of purchases that a customer would

make over a lifetime of patronage. Firms do not want to capture a customer for one purchase

rather they want to conserve the customer through their service to make the customer loyal.

Customer life time value focuses on the satisfaction and conservation of the customer. For

example: Mr. Rahim is a loyal customer of Menz Club (A outfit store for Men). If he buys till his

death worth of Tk. 200000 outfit from Menz Club then this Tk. 200000 is the customer life time

value for Menz Club of Mr. Rahim.

On the other hand Customer equity is the total combined customer life time values of all the

companys current and potential customers. For Example: Store has 10 customers. Everyone has

TK. 100000 life time value. Then the customer equity of the firm will be Tk. 100000*10 = Tk.

1000000.

Marketers can build customer equity capturing customer life time value by following some

techniques. First of all firms have to spend money in advertising to attract customers to come to

their store and purchase their products. In this case company must keep in mind to serve quality products at a competitive price. Again firms may give special offers and return customers awards

as a result customers will be keen to spend more for that product. If the firm is able to

consistently exceed the expectation of the customers, firm will no longer required to spend

money to convince the customers to shop in their store and with this customers life time value

increases. Additionally satisfied customers offer the most powerful form of advertising and that

is word of mouth. Through this media firm will get new customers along with the existing value

of the old customers and this advertising will cost nothing to the firm. As a result customers will

increase as well as the life time value of the loyal customers increases. With more profitable

loyal customers there will be higher customer equity. This is how the customer equity increases

capturing customer life time values.


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Question 2: Using the buyer decision process trace a recent purchase you have made. Be

sure to examine each of the five stages of the buyer decision process and detail your

experience in each stage. What could the seller have done to make your buying experience

better? Did you experience any cognitive dissonance? Explain it.

Answer 2:

Recently I have purchased a bicycle. My buying decision process for purchasing the bicycle is

given below.

Need Recognition: Recently I have found that many of my friends had purchased bicycle to go

to their offices as well as to universities. When I met with my friends they told me about the

benefits of bicycle. They told me that it is good to do cycling. It also saves time to reach to your

destination. Talking with my friends I was convinced and feeling interested to buy a bicycle

which I can use to go to office and university that would save my time, money and keep my body

fit.

Information Search: After feeling the need for a bicycle I started looking for information about

different bicycles. I asked my friends which companys bicycles are good. All of my friends

suggested me that Meghna group bicycles and Lion bicycles are export quality and they regularly

export bicycles to different parts of the world. Then I queried about bicycles of Meghna group

and Lion cycles in websites and look for different models and also visited some outlets of

bicycle stores. I gathered information about different models from websites and personal

contracts. Based on the information I was able to short list some of the models according to my

criteria.

Evaluation of Alternatives: In my evaluation process I have focused on three factors they

specialized parts, style and price. I have short listed three models at beginning. They were

Veloce legion 50, Veloce Legion Legacy and Core project 1.5 from lion cycle. But when Iranked them according to my needs I ranked Veloce Legion legacy as my first choice, then Core

project 1.5 and then Veloce legion 50. I chose Veloce Legion legacy because it has included a

SRAM Avid BB5 disk brake and also used SRAM shifter, SRAM rear derailleur and SRAM

front derailleur. Those are the core and heart of a bicycle. They have also used a top quality SR


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SUNTOUR XCM with Hydraulic Lock Out fork. The color and style was superb which go with

my image and the price was only Tk. 24500 and it was in my budget.

Purchase Decision: Based on my preferences I chose to purchase Veloce Legion legacy. So at

last I purchased Veloce Legion legacy from Cycle life outlet situated at Satmasjid road.

Post Purchase Behavior: I was satisfied with my purchase of Veloce Legion legacy. It gives a

great feeling and experience. I enjoyed riding my bicycle. It is smooth and has low weight as

result it has great grip. It is very comfortable to ride the cycle. So I did not find any cognitive

dissonance from the purchase.

I felt that marketer should add a technique which could make my buying experience better.

Marketer could introduce test ride facility which could help me to evaluate the differences

between the cycles more accurately because I had to guess many things at the time of buying.

This test ride could make the evaluation process more easier.

customer life time value, customer equity & buyer decision process

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