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Introduction
Lecture 1
Agenda
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Module Guide
Assessment
Customer Value
New marketing: marketing is dead, long live marketing!
Customer value
value-based pricing
value-added
value chain
net present value
market value
value-positioning
net book value
value driver
value migration
value engineering
fair value
shareholder value
Customer lifetime value
best value
Chartered Institute of Marketing
definition 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, developing
relationships, creating good customer service and communicating
benefits.
With a customer-centric view, marketing brings positive return on
investment, satisfies shareholders and stakeholders from business
and the community, and contributes to positive behavioural change
and a sustainable business future.
Definition of marketing
Marketing is a customer focus that permeates
organisational functions and processes and is geared
towards marketing promises through value
propositions, enabling the fulfilment of individual
expectations created by such promises and fulfilling such
expectations through support to customers’ valuegenerating processes, thereby supporting value
creation in the firm’s as well as its customers’ and
other stakeholders’ processes.
Source: Gronroos, C., 2006 On defining marketing: finding
a new roadmap for marketing, Marketing Theory, 6, 395-417
More definitions of marketing
Marketing is a social and managerial process by which individuals
and groups obtain what they need and want through creating and
exchanging products and value with others
Marketing is the process by which companies create value for
customers 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 ed Harlow Prentice Hall
Importance of Customer value
• Marketing - managerial process concerned with the
facilitation and consumption of exchanges
• Exchange - transaction between two parties in which
each party give up something of value in return for
something of greater value,
• Consumer value plays a crucial role at the heart of all
marketing activity (Holbrook, 1999 p. 1)
Source: Holbrook, M. B., 1999 Consumer Value
A framework for analysis and research. Abingdon: Routledge
Nature of consumer value
Holbrook 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 Value
A framework for analysis and research. Abingdon: Routledge
Types of consumer value
Three key dimensions
 Extrinsic vs intrinsic value
 Self-orientated vs other-orientated value
 Active vs reactive value
Typology of Consumer Value
Extrinsic
Self-orientated
Other-orientated
Intrinsic
Active
Efficiency
Play
Reactive
Excellence
Aesthetics
Active
Reactive
Status
Esteem
Source: Holbrook, M. B., 1999 Consumer Value
A framework for analysis and research. Abingdon: Routledge
Ethics
Spirituality
Customer perceived value definition
… perceived value is the consumer's overall assessment
of the utility of a product based on perceptions of
what is received and what is given. Though what is
received varies across consumers (i.e., some may want
volume, others high quality, still others convenience) and
what is given varies (i.e., some are concerned only with
money expended, others with time and effort), value
represents a trade-off of the salient give and get
components.
Source: Zeithaml, V. A., 1998 Consumer Perceptions of Price, Quality, and Value:
A Means-End Model and Synthesis of Evidence Journal of Marketing 52 (July): 2-22
Customer perceived value
Customer –perceived value =
Perceived Benefits
______________
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
Customer perceived value
in relationships
Episode benefits + relationship benefits
Total episode value =
Episode sacrifices + relationship sacrifice
• poor episode value can be balanced by a positive perception of the
relationship as a whole
• management of any firm should note that the episode value and the
relationship value exist in a mutually dependent relationship
Ravald, A. and Gronroos, C., The value concept and relationship marketing
European Journal of Marketing Vol 30 No 2 1996 p 19 - 30
Value
Customer value is a customer’s perceived preference for
and evaluation of those product attributes, attribute
performances, and consequences arising from use that
facilitate (or block) achieving the customer’s goals and
purposes in use situations.
Source: Woodruff, R. B., 1997 Customer Value: The Next Source for Competitive Advantage
Journal of the Academy of Marketing Science Vol 25 No. 2, pages 139 - 153
Customer Value Hierarchy Model
Source: Woodruff, R. B., 1997
Desired Customer Value
Customers’ goals and
purposes
Desired consequences
in use situations
Customers’ goals and
purposes
Customer Satisfaction with
Received Value
Goal-based
satisfaction
Consequence-based
satisfaction
Attribute-based
satisfaction
New marketing:
marketing is dead,
long live marketing!
Agenda
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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
The process of
going to market
Creativity
Innovation
Reinvention
Processes that define value
e.g., market knowledge and
learning, CRM, research, intelligence
Processes that create value
e.g., new product development, innovation,
brand development, strategic relationships
Processes that deliver value
e.g., channels, supply chain,
customer service
Resources
Capabilities
Strategic relationships
Customer
value
What managers need to know
• The process of going to market, not “marketing” in the
traditional 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
21st Century challenges
New business
Innovation
models
Business
agility
Crisis
Global
survival Siege recession
The process of going to market
Aggressive Globalization Virtuality
investment
Paradox CSR
Strategy
The strategic pathway
Strategic thinking and
thinking strategically
Market
sensing
and
learning
strategy
Strategic
market
choices
and
targets
Customer
value
Strategic
strategy
relationships
and
and
positioning
networks
Strategic
transformation
and strategy
implementation
A route-map for marketled strategic change
Part I
Customer value
imperatives
Part II
Developing a value-based
marketing strategy
The strategic pathway
Market sensing
and learning
strategy
The Customer
is always
right-handed
New
marketing
meets
old marketing
Value-based
marketing
strategy
Strategic
thinking and
thinking
strategically
Strategic
market choices
and targets
Customer value
strategy and
positioning
Strategic
relationships
and networks
Part III
Processes for managing
strategic transformation
Change strategy
Strategic
gaps
Organization
and processes
for change
Implementation
process and
internal
marketing