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