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3 3-1 Value Creation in Buyer-Seller Relationships VALUE CREATION IN BUYER-SELLER RELATIONSHIPS 3-2 VALUE CREATION IN BUYER-SELLER RELATIONSHIPS Learning Objectives • Understand the concept of perceived value and its importance in relationship selling • Explain the relationship of the roles of selling and marketing within a firm • Explain why customer loyalty is so critical to business success 3-3 VALUE CREATION IN BUYER-SELLER RELATIONSHIPS Learning Objectives • Recognize and discuss the value chain • Identify and give examples for each category of communicating value in the sales message • Understand how to manage customer expectations 3-4 VALUE CREATION IN BUYER-SELLER RELATIONSHIPS Value is Related to Customer Benefits • Utility – the want-satisfying power of a good or service • Types of Utility • • • • 3-5 Form Place Time Ownership VALUE CREATION IN BUYER-SELLER RELATIONSHIPS Increasing the Value to the Customer • Raise benefits • Reduce costs • Raise benefits and reduce costs • Raise benefits by more than the increase in costs • Lower benefits by less than the reduction in costs 3-6 VALUE CREATION IN BUYER-SELLER RELATIONSHIPS Lifetime Value of a Customer • Lifetime value of a customer – present value of the stream of future profits expected over a customer’s lifetime of purchases • Firing a customer – encouraging a customer to find alternative sources from which to purchase 3-7 VALUE CREATION IN BUYER-SELLER RELATIONSHIPS Communicating Value in the Sales Message 3-8 • Product quality • Channel deliverables (supply chain) • Integrated marketing communications (IMC) • Synergy between sales and marketing VALUE CREATION IN BUYER-SELLER RELATIONSHIPS Communicating Value in the Sales Message 3-9 • Execution of marketing mix programs • Quality of the buyer-seller relationship (trust) • Service quality • Salesperson professionalism VALUE CREATION IN BUYER-SELLER RELATIONSHIPS Communicating Value in the Sales Message 3-10 • Brand equity • Corporate image/reputation • Application of technology • Price VALUE CREATION IN BUYER-SELLER RELATIONSHIPS Product Quality 3-11 •Performance •Durability •Features •Serviceability •Reliability •Aesthetics •Conformance •Perceived quality VALUE CREATION IN BUYER-SELLER RELATIONSHIPS Integrated Marketing Communications • Solid IMC allows salespeople to solidify their client relationships by referring to a well-known, consistent corporate message • Clients expect and deserve consistency in the way a firm’s valueadded message is put forth 3-12 VALUE CREATION IN BUYER-SELLER RELATIONSHIPS IMC – Communicating the Message Firm’s employees and other internal stakeholders Firm’s internal value chain Customers and other external stakeholders 3-13 VALUE CREATION IN BUYER-SELLER RELATIONSHIPS Synergy Between Sales and Marketing • Seamless organizational processes focused on managing customer relationships strengthen the value proposition • When sales and marketing are not synergistic, the customer is marginalized 3-14 VALUE CREATION IN BUYER-SELLER RELATIONSHIPS Execution of Marketing Mix Programs • Product • Place - for distribution, or getting the product into the hands of the customer • Price • Promotion - marketing communications 3-15 VALUE CREATION IN BUYER-SELLER RELATIONSHIPS Quality of the Buyer-Seller Relationship • The quality of the buyer-seller relationship is measured by trust • Trust - a belief by one party that the other party will fulfill its obligations • Trust is essential to successful relationship selling • Trust signifies that a salesperson has the customer’s long-term interests at heart 3-16