Customers are value-maximizers. They form an expectation of value and act on it. Buyers will buy from the firm that they perceive to offer the highest customer-delivered value, defined as the difference between total customer value and total customer cost.

A buyer’s satisfaction is a function of the product’s perceived performance and the buyer’s expectations. Recognizing that high satisfaction leads to high customer loyalty, many companies today are aiming for TCS – total customer satisfaction. For such companies, customer satisfaction is both a goal and marketing tool.

Strong companies develop superior capabilities in managing core business processes such as a new product realization, inventory management, and customer acquisition and retention.

Managing these core processes effectively means creating a marketing network in which the company works closely with all parties in the production and distribution chain, from suppliers of raw materials to retail distributors. Companies no longer compete – marketing networks do.

Losing profitable customers can dramatically affect a firm’s profits. The cost of attracting a new customer is estimated to be five times the cost of keeping a current customer happy.

The key to retaining customers is relationship marketing. To keep customers happy, marketers can add financial or social benefits to products, or create structural ties between the company and its customers.