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Introduction

Lecture 1

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Agenda

Module Guide

Assessment

Customer Value

New marketing: marketing is dead, long live marketing!

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Customer value

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value engineering

value chain

value-positioning

net present value

value migration

value driver

value-added

value-based pricing

shareholder value

market value

fair value

net book value

best valueCustomer lifetime value

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Chartered Institute of Marketingdefinition of marketing (2007)

The strategic business function that creates value by stimulating,facilitating and fulfilling customer demand.

It does this by building brands, nurturing innovation, developingrelationships, creating good customer service and communicatingbenefits.

With a customer-centric view, marketing brings positive return oninvestment, satisfies shareholders and stakeholders from businessand the community, and contributes to positive behavioural changeand a sustainable business future.

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Definition of marketingMarketing is a customer focus that permeates

organisational functions and processes and is gearedtowards marketing promises through valuepropositions, enabling the fulfilment of individualexpectations created by such promises and fulfilling suchexpectations through support to customers value-

generating processes, thereby supporting valuecreation in the firms as well as its customers andother stakeholders processes.

Source: Gronroos, C., 2006 On defining marketing: findinga new roadmap for marketing, Marketing Theory, 6, 395-417

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More definitions of marketingMarketing is a social and managerial process by which individuals

and groups obtain what they need and want through creating andexchanging products and value with others

Marketing is the process by which companies create value forcustomers and build strong customer relationships in order to

capture value from customers in return

Source: Kotler, P., Armstrong, G., Wong, V., Saunders, J., 2008,Principles of Marketing. 5th european edHarlow Prentice Hall

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Importance of Customer value Marketing - managerial process concerned with the

facilitation and consumption of exchanges Exchange - transactionbetween two parties in which

each party give up something of valuein return forsomething of greater value,

Consumer value plays a crucial role at the heart of allmarketing activity (Holbrook, 1999 p. 1)

Source: Holbrook, M. B., 1999 Consumer ValueA framework for analysis and research. Abingdon: Routledge

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Nature of consumer valueHolbrook definition

An interactive relativistic preference experience

Interactive - interaction between some subject (consumer/customer)and some object (product).

Relativistic (a) comparative (involving preferences among objects)(b) personal (varying across people), (c) situational (specific to the

context) Preferential embodies a preference judgement Experience resides in the consumption experience (s)


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Types of consumer valueThree key dimensions

Extrinsic vs intrinsic value

Self-orientated vs other-orientated value

Active vs reactive value

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Typology of Consumer Value

Extrinsic Intrinsic

Self-orientated Active Efficiency Play

Excellence

Status

Esteem

Aesthetics

Ethics

Spirituality

Other-orientated

Reactive

Active

Reactive


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Customer perceived value definition

perceived valueis the consumer's overall assessmentof the utility of a product based on perceptions of

what is received and what is given. Though what isreceived varies across consumers (i.e., some may wantvolume, others high quality, still others convenience) andwhat is given varies (i.e., some are concerned only withmoney expended, others with time and effort), valuerepresents a trade-off of the salient give and getcomponents.

Source: Zeithaml, V. A., 1998 Consumer Perceptions of Price, Quality, and Value:A Means-End Model and Synthesis of Evidence Journal of Marketing52 (July): 2-22

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Customer perceived valuePerceived Benefits

Customerperceived value = ______________Perceived Sacrifice

Benefits = attributes of core product/service and supporting services,perceived quality and price

Sacrifice = customer costs involved in purchasing, such as time, travel,repairing faulty work, etc. NOT just price

Source:Monroe, K. B., 1991 Pricing Making Profitable Decisions, McGraw-Hill, New York, NY. Quoted in Ravald, A.and Gronroos, C., The value concept and relationship marketing European Journal of Marketing Vol 30 No 2 1996 p 19 - 30

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Customer perceived valuein relationships

Episode benefits + relationship benefitsTotal episode value =

Episode sacrifices + relationship sacrifice

poor episode value can be balanced by a positive perception of therelationship as a whole

management of any firm should note that the episode value and therelationship value exist in a mutually dependent relationship

Ravald, A. and Gronroos, C., The value concept and relationship marketingEuropeanJournal of MarketingVol 30 No 2 1996 p 19 - 30

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Value

Customer value is a customers perceived preference forand evaluation of those product attributes, attributeperformances, and consequences arising from use thatfacilitate (or block) achieving the customers goals and

purposes in use situations.

Source: Woodruff, R. B., 1997 Customer Value: The Next Source for Competitive AdvantageJournal of the Academy of Marketing ScienceVol 25 No. 2, pages 139 - 153

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Customer Value Hierarchy ModelSource: Woodruff, R. B., 1997

Desired Customer Value Customer Satisfaction withReceived Value

Customers goals and

purposes

Desired consequencesin use situations

Customers goals and

purposes

Goal-basedsatisfaction

Consequence-basedsatisfaction

Attribute-basedsatisfaction

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New marketing:marketing is dead,

long live marketing!

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Agenda

The process of going to market

What managers need to know

Challenges for the 21st century manager

The strategic pathway A route-map for market-led strategic change

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The process ofgoing to market

Processes that define valuee.g., market knowledge and

learning, CRM, research, intelligence

Processes that create valuee.g., new product development, innovation,brand development, strategic relationships

Processes that deliver value

e.g., channels, supply chain,customer service

Customervalue

ResourcesCapabilities

Strategic relationships

CreativityInnovationReinvention

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What managers need to know

The process of going to market, not marketing in thetraditional sense:

understanding customers and superior value

building marketing strategy to deliver a robust value

proposition to customers achieving implementation by driving the things that

matter through the corporate environment

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21st Century challenges

New businessmodels Innovation

Businessagility

Crisissurvival Siege

Globalrecession

The process of going to market

Aggressiveinvestment

Globalization Virtuality Paradox CSR Strategy

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The strategic pathway

Market

sensingandlearningstrategy

Strategicmarketchoicesandtargets

Customervaluestrategyandpositioning

Strategicrelationshipsandnetworks

Strategic thinking andthinking strategically

Strategictransformationand strategyimplementation

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A route-map for market-led strategic change

Value-basedmarketingstrategy

Newmarketing

meets

old marketing

Strategicthinking and

thinking

strategically Customer valuestrategy andpositioning

The strategic pathway

Strategicmarket choices

and targets

Market sensingand learning

strategy

Strategicrelationshipsand networks

Change strategy

Strategicgaps

Organizationand processes

for change

Implementationprocess and

internalmarketing

Part ICustomer value

imperatives

Part IIDeveloping a value-based

marketing strategy

Part IIIProcesses for managingstrategic transformation

The Customer

is alwaysright-handed

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