Pearson Education



Video Title: Zappos: Marketing – Creating and Capturing Customer Value

Run Time: 6:21

Classroom Application: Instructors will find this video useful in the study of creating customer value. Zappos serves as an excellent case study for this topic because the company strives to create and capture customer value through offering excellent customer service. Providing students with such knowledge can help them to appreciate and better understand the importance of finding unique ways to capture customer value.

Synopsis

Zappos is an online retailer of shoes, clothing, handbags, and other retail merchandise. The company, however, is not really about selling products; the focus of Zappos is to offer customers a hassle-free customer service experience. The challenge to creating customer value through great customer service is knowing what to do when customer services fail. Zappos’ solution to this challenge is simply to do the right thing for the customers. This allows Zappos to keep a strong reputation and has been the basis for Zappos’ growth.

Discussion Questions

1. Describe Zappos’ market offering.

A market offering is “some combination of products, services, information, or experiences offered to a market to satisfy a need or want.” Students can easily identify the combination of products that Zappos offers that include shoes, clothing, handbags and accessories, beauty items, eyewear, sporting goods, and many other categories of retail items. However, students should be challenged to identify the rest of the Zappos package. This could include:

• Services – online shopping, 24-hour customer service, free shipping both ways

• Information – detailed product descriptions with 360-degree views and video, brand and company information, product reviews and ratings

• Experience – This revolves around the nature of Zappos customer service culture. Every customer can speak directly with a person who treats you like an old friend. The online interface is easy to use and customizable. Zappos interacts with customers in a very personal way when customers login to the Web page, through email, and through social media.

2. What is Zappos’ main marketing strategy?

Zappos’ main marketing strategy is the excellent customer service the company provides. Much of the growth at Zappos can be attributed to repeat customers and word-of-mouth advertisement. Zappos’ reputation as a company with excellent customer service is worth more to the company than its marketing budget.

3. How does Zappos build long-term customer relationships?

While this video is brief, it gives a nice peak inside the culture at Zappos. The company starts by recruiting and training only people that will be truly customer-oriented employees, regardless of their job title. Every employee is trained in Zappos’ ten core values. Through this, the old cliché that “The customer is always right” is truly believed, practiced, and lived by Zappos employees. The case study in this video is a perfect example of that. Zappos did not have to honor the error in price for all the customers who purchased the shoes in question. In fact, there are few companies that would have. And likely, there are few customers who would have held it against Zappos. Zappos also could have not honored the price, but offered the customer in question some other bonus ($20 off on the next order, free shoe laces, etc.) that wouldn’t cost the company so much. But Zappos truly chose to go above and beyond. To do so when it didn’t have to is the mark of a truly customer-centric company.

Quiz

1. What differentiates Zappos from other online retailers?

a. low prices

b. superior quality merchandise

c. great customer service

d. unique merchandise options

Answer: c

Explanation: Zappos sells great products, but the company’s main focus is on providing customers with excellent customer service.

2. Which of the following policies are offered by Zappos?

a. large blanket discounts

b. 365-day return policy

c. great coupon deals

d. weekly specials that are good for only one hour

Answer: b

Explanation: Zappos does not try to compete with other companies on price. The company does not offer discounts or coupons. Instead, the focus at Zappos is on customer service, and part of this customer service plan is a 365-day return policy.

3. Zappos believes the company’s target market desires which of the following features?

a. low prices and hassle-free customer service

b. low prices and great products

c. great products and hassle-free customer service

d. low prices, great products, and hassle-free customer service

Answer: c

Explanation: Zappos has a great sense of their market and their customers’ needs. Zappos’ believes their customers desire great products delivered to them in a hassle-free way.

4. Which marketing strategy is responsible for most of the growth experienced by Zappos?

a. television advertisement

b. print advertisement

c. repeat customers and word-of-mouth advertisement

d. online banner advertisement

Answer: c

Explanation: Zappos’ reputation for great customer service provides the company with more useful advertisement than their marketing budget. Repeat customers and word-of-mouth advertisement is what fuels the growth of this company. Marketing at Zappos is about building profitable relationships with customers.

5. When Zappos’ sister site, , made a huge pricing error, what was the overall result for Zappos?

a. It cost the company approximately 1.6 million dollars, a loss from which the company has never recovered.

b. Zappos cancelled the orders made in error, costing the company its reputation as a provider of excellent customer service.

c. Zappos cancelled the largest of the orders made in error and took a loss on the others in an effort to maintain customer loyalty.

d. Zappos honored all of the mispriced orders, losing 1.6 million dollars, but was able to regain much of this loss in the positive public relations the company received as a result of their decision.

Answer: d

Explanation: Although Zappos had the legal right to cancel orders made during the pricing error, the company decided to do the right thing for customers and stand behind those orders. As a result, Zappos received a great deal of positive publicity about the company’s honorable way of doing business. In the end, the error and the way Zappos handled the situation turned out to be a positive for the company.

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