...Explanation Customer value in short is the value a customer places on a product or service. Yu-Qian and Chen (2012) described customer value as “a customer’s overall assessment of the utility of a product (or service) based on perceptions of what is received and what is given” (p. 485). Customer value is made up of a variety of strategies and it can vary from product and service. Customer satisfaction and loyalty are a couple of matrixes used to form what customer value is. Comparison The quality of a product or service as explained by Meredith and Shafter (2013) is often associated to products and services from customers (p. 19). The better the value of a product or service to a customer the likelihood that the customer will become loyal to the brand or business, thus leading to the likelihood purchasing add-ons and upgrades. An article by Ming-Tien, Chung-Lin and Han-Chao (2010) continues with this point that as the expectations are met the more likely the customer satisfaction is to grow including increased consumption of the product or service (p. 731). An article by Sukwadi, Yang and Fan discusses that Customer value “is commonly conceptualized as the customer’s perceived trade-off between benefits and sacrifices within relationships” (p. 384). Each person have their own perception on value thus it can become challenging for a business to judge or rate customer value. “Companies are supposed to learn about customer value, create it, and develop delivery processes”...
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...“Managing Customer Value” suggests that customers might be the key to improve profits. Customers are assets to firms; they generate revenues. However, some assets generate more revenues than other. In order to foster maximum returns from the customers, it becomes imperative to understand the differences between customers groups. Recognizing this diversity will enable value extraction from the investments. Unfortunately, most companies are unable to distinguish between the profitable and the unprofitable customers. One approach in measuring and managing customer value is the “Customer Value Management Cycle”. This cycle consists of 5 steps. 1. Customer segmentation; A proper segmentation drives profits by tailoring values to fit different customer needs. Thus, marketing should be correlated to different behaviors that steer customer profitability. Segments are dynamic and should be continuously refined as understanding of customers increases. Finally, including potential customers in the segments is also advantageous as it can help the company meet the needs of these customers. 2. Segment margins; Value from segmenting the customer base will be maximized when the profitability of these segments is measured. This in turn will allow formulating the right strategy and effective management. An effective method to increase margins is to locate the highest costs and figure out if there are possibilities to allocate these costs to customers. 3. Customer Lifetime Value (CLV);...
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...The best measures of actual and potential value for each of the listed customer bases Introduction According to our textbook actual value is the “net present value of the future financial contributions attainable to a customer” (pg. 57) Actual value is based on information that is already known about the customer and requires no changes on the part of the business in order to obtain that value. Actual value is also known as the lifetime value because it measures the total value that the customer will bring to the company from value-creating events during the entire course of their relationship with the company. Potential differs from actual value because it is what the company could get from the customer if the company was to make the relevant changes needed to encourage a customer to change their behavior. This is a more difficult thing to measure because while actual value is based on past information potential value is an estimate of future actions. Although it is more difficult, it is possible to look at historical data from similar customers in order to make these estimates. Customers for a B2B electronics components distributor Based on the information found in the textbook I would say that customers for B2B electronics components distributors belong to the category of “Super Growth Customers.” There are not as many customers for electronic components and as a result of that there is high actual value because these accounts will be enormous and based on the 80-20...
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...commercial painting contractors—a key customer segment—the company learned that labor constituted the lion’s share of contractors’ costs, while paint made up just 15% of costs. Armed with this insight, the resin maker emphasized that its product dried so fast that contractors could apply two coats in one day—substantially lowering labor costs. Customers snapped up the product—and happily shelled out a 40% price premium for it. To craft compelling customer value propositions: UNDERSTAND CUSTOMERS’ BUSINESSES Invest time and effort to understand your customers’ businesses and identify their unique requirements and preferences. Example: The resin manufacturer deepened its understanding of key customers in several ways. It enrolled managers in courses on how painting contractors estimate jobs. It conducted focus groups and field tests to study products’ performance on crucial criteria. It also asked customers to identify performance trade-offs they were willing to make and to indicate their willingness to pay for paints that delivered enhanced performance. And it stayed current on customer needs by joining industry associations composed of key customer segments. SUBSTANTIATE YOUR VALUE CLAIMS “We can save you money!” won’t cut it as a customer value proposition. Back up this claim in accessible, persuasive language that describes the differences between your offerings and rivals’ that matter most to customers. And explain how those differences translate ...
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...Value of Customer Loyalty Yang, 2004 mentioned that the customer loyalty can be generated through improving customer satisfaction and offering high product or service value. He further suggested that the firms may focus on five key dimensions to identify the customer loyalty by providing quality customer services, performing the service correctly by executing transactions accurately, providing an appropriate range and offering features to target customers and ease of use and security or privacy. Previous studies Service Quality in the banking sector: the impact of technology on service delivery (Joseph, McClure and Joseph, 1999). The study examined the role that technology plays in Australian banking and its effect on the delivery of the perceived...
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...Customer Lifetime Value (SMALL BOOK 167-177) * Customer lifetime value (CLV), is the net present value of the cash flows attributed to the relationship with a customer. * The use of customer lifetime value as a marketing metric tends to place greater emphasis on customer service and long-term customer satisfaction, rather than on maximizing short-term sales. * Two approaches to CLV: * Disaggregate (“spreadsheet”)– Complex and cumbersome, but allows you to build in any assumptions you want and see how they affect the result. * Aggregate (“analytic”) – Makes (often strong) assumptions, hard to see the mechanism. Easy to remember and compute, allows you to focus on the big factors. BASIC CLV MODEL: ( a.k.a Margin Multiple ) It reflects the proportion of one’s per-customer profit margin you expect to recoup over time. m: profit margin per period r: retention rate i: discount rate Key Insights | Assumptions | * Retention and loyalty are key to long-term value. * Other factors (e.g., discount rate) only have an impact when retention is high. All the handwringing about what discount rate to use is irrelevant in many real-world situations. * Margin matters, but it is independent of the other factors. * Customer-based costing is important, and often absent. | * Profit margins are constant * Defection rates are stable over time * Discount rates are stable over time * The customer’s lifetime is infinite | * | Implications...
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...company, we have to create more value in each one of our customers. Customer lifetime value is a powerful and straightforward measure that generates higher customer profitability. For existing customers, customer lifetime value helps companies develop customer loyalty and maximize each customer’s value. For newly acquired customers, customer lifetime value helps companies develop strategies to grow the right customers. If a customer understands all that our company has to offer then they have a more well-rounded idea of their options. You can never assume that a customer will spend money on only the items that they have inquired about. The strategies that I believe we should put in place are cross-selling and up selling. This depends on how well we develop our sales strategies. By implementing these strategies we will increase our customer value by teaching them all of what is available to them. The way to develop more value is by training our technical staff to be thoroughly knowledgeable about our product and the sales strategies that are successful. As a result, they can offer other solutions to customers when they inquire about issues they are currently having. “Quality customer service is taking on a key role in competitive business strategy, and as customer expectations and needs continue to grow in complexity, selling organizations are finding that they can no longer depend solely on salespeople as the exclusive arbiter of customer satisfaction(Ingram, LaForge, Avila...
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...1919 that Jack Cohen had founded the company in the form of a group of market stalls. Later, the business saw a quick expansion and by the year 1939 Tesco was spread all over the country in the form of 100 Tesco stores. Initially built as a UK-focused grocery retailer, The Company has been subject to increased geographical and segmental diversification since the 1990s. At present, Tesco operates in clothing, books, furniture, electronics, petrol and software; internet and telecoms services; financial services; music downloads; and DVD rental. Delivering Customer Value Tesco is one of the leading companies that focus upon the customer service delivery and creating value for them. The company creates values for its customers in the following manner: Marketing Mix Tesco has created it marketing mix or Ps (product, price, place, and promotion) in order to align these factors with the customers' needs and affordability. The entry into different markets all over the world by Tesco has been made by significant adaption to the consumers' culture in relevant markets. It has made certain changes in the service provision with respect to its four Ps which are completely in...
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...Starbucks: Delivering Customer value Case Analysis Case facts • Howard Schultz’s idea with Starbucks in the mid 1980’s was to create a chain of coffeehouses with a product differentiation of specialty “live coffee”, service or customer intimacy with an “experience”, and an atmosphere of a “third place” to add to their work and home alternatives • The original stores sold whole beans and premium-priced coffee beverages by the cup and catered primarily to affluent, well educated, white-collar patrons between the ages of 25 and 44 • By 2002, there were over 5,000 stores around the globe • The specialty items included strategic alliances with Pepsi Cola to sell alternative beverages, Dreyer’s to develop and distribute a line of premium ice creams, Kraft Foods handled sales of coffee and alternative products to warehouse clubs, and various grocery store chains for their coffee. • Baristas (employees) were encouraged to interact with customers in a friendly and prompt manner, and were paid higher than average wages and benefits. Employees were considered partners and promotions were usually from within the company. • While Starbucks was the largest specialty coffee chain, many other chains competed directly with Starbucks, and many other chains could at any time enter retail specialty coffee sales (e.g. Dunkin Donuts, convenience stores, and many similar retail food stores. • New innovation was based upon partner acceptance. Customers rated the new innovations as being...
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...Customer-First Values Shape Hiring Decisions at Zappos Tanya Huff Kaplan University MT203-02 Human Resource Management Andrew Toussaint November 16, 2014 Introduction Zappos is an online retailer of shoes. Zappos is committed to offering the best customer service. Zappos also wants to have a dynamic, fulfilling company culture. (Gerhard, Hollenbeck, Noe and Wright, 2009) A solid recruiting policy can help Zappos entice qualified applicants that have the same interests in the company’s culture. The selection process can help Zappos find the qualified employees that are going to fit into the company’s cultures and have the same value systems. Review/Analysis of the Case A recruitment policy that might benefit Zappos is image advertising. Image advertising would say that Zappos is a good place to work. It would stress the company’s values such as “Deliver Wow through service” and “Create fun and a little weirdness.” Possible employee would see this and know if they would fit into Zappos’ culture and that they are attracted to Zappos. This policy would be a good fit for Zappos because it is focused on finding an employee that will be a good fit with the company’s culture. The image advertising policy should have a positive impact on Zappos. Zappos is looking for employees that will be willing and interested in buying into their company culture and into following their values. The first step in the selection process at Zappos...
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...Customer Complaint has a good value to Company I absolutely agree with the customer's complaint is the seat of Baoshan remark. Because the customer's expectations for the company's products, so after the purchase when there are errors found naturally upset, so ask the company, so the company should be careful to understand customers are not satisfied with the place, and make improvements. Customer complaints for many reasons, there may be a lack of local products, by handling customer complaints, you can make yourself a better understanding of the manufacturing process and product features the company's products. For example, I was the Secretary for the sales of instant noodles, soup packets may be left behind in the production process, customers will naturally not happy after opening the product, so you can reflect on the vulnerability of production to the person in charge of production, strengthening quality management. Another error is that the package instructions or instructions for use and the actual different, because a lot of customers when the company will follow the steps set out to do. If the effect can not be made as scheduled, the customer naturally unhappy after opening the product, they can take packing instructions or use the opportunity to learn whether there are deficiencies. If the effect can be made as scheduled, it can be personally taught the proper use of the customer; Ruoguo failure to make timely results, requires the company responsible immediately...
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...organizations Understanding the Process of Transitioning to Customer Value Management B Muthuraman, Anand Sen, Peeyush Gupta, DVR Seshadri, and James A Narus Executive Summary KEY WORDS Tata Steel Customer Value Management (CVM) Business Markets Commoditization Spiral Value Creation/Sharing Customer Retention Customer Value Management (CVM) has emerged as an important vehicle for customer retention in business markets. Supplier firms under increasing pressure from relentless competitive forces are seeking to retain and grow the share of business from profitable existing customers as a means of finding a way out of downward spiralling price pressures. While a lot has been written in academics about the importance of CVM, several gaps remain on understanding how a large company actually undertakes this journey. Crafting competitive value chains and focusing on streams of competition are also emerging as important agenda for supplier firms since, increasingly, the end customer is no longer willing to pay for inefficiencies in the value chains. In this context, the challenge for a supplier firm in business markets is no longer restricted to getting its own operations in order, but, additionally, it must ensure that multiple interfaces that exist across the entire value chain all the way until the end customer are streamlined so that the value chain is free of value drains and every meaningful opportunity to create value is exploited. In this paper, the authors present the experiences...
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...to create loyalty by creating value for consumers. Discuss whether what are often known as loyalty programs truly generate loyalty. Explicitly, discuss the concept of VALUE; how it is created, how it captured, and the relationship between value and expectations. Hamel (1996), explains a loyal customer is one that has a “a deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior”. Companies attempt to create loyalty in many different ways with marketing techniques that create a better value for the customers such as; offering a coupon, providing a store merchandise card with purchase rewards, buy cheap and sell cheap, and numerous other methods. Providing value is the only way to maintain customer satisfaction and loyalty. Value is created by providing the best product, made from the best materials, that is meant to withstand and last the duration of its purpose. Value is created when a product does exactly what is expected of it. According to Barwise & Meehan (2005) customers usually choose the brand that they expect to give them the basics that outperform the competition. When a customer has certain expectations for a product and they follow through as specified then the company has created value and the customer will become loyal. If expectations of the product are failed then the product has no value, but if it does what it states...
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...Unfreeze, Change, Freeze Kurt Lewin proposed a three stage theory of change commonly referred to as Unfreeze, Change, Freeze (or Refreeze). It is possible to take these stages to quite complicated levels but I don't believe this is necessary to be able to work with the theory. But be aware that the theory has been criticised for being too simplistic. A lot has changed since the theory was originally presented in 1947, but the Kurt Lewin model is still extremely relevant. Many other more modern change models are actually based on the Kurt Lewin model. I'm going to head down a middle road and give you just enough information to make you dangerous...and perhaps a little more to whet your appetite! So, three stages. Unfreezing, Change, Freezing. Let's look at each of these. Stage 1: Unfreezing The Unfreezing stage is probably one of the more important stages to understand in the world of change we live in today. This stage is about getting ready to change. It involves getting to a point of understanding that change is necessary, and getting ready to move away from our current comfort zone. This first stage is about preparing ourselves, or others, before the change (and ideally creating a situation in which we want the change). The more we feel that change is necessary, the more urgent it is, the more motivated we are to make the change. Right? Yes, of course! If you understand procrastination (like I do!) then you'd recognise that the closer the deadline, the more likely...
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...PREDICAMENT CALLED ‘VALUE CREATION’ FOR TODAY’S CUSTOMERS WITH A FOCUS ON AN EMERGING MARKET OF NORTH BENGAL PRESENTED BY: NIRMALYA ACHARJEE DIRECTOR, INSTITUTE OF MANEGEMENT AND ENTREPRENEURSHIP DEVELOPMENT SILIGURI INDEX Sl. No. 1 2 3 4 5 6 Topic Introduction Related work Presented work Research methodology Evaluation results Conclusions Page no. 3 5 7 10 11 16 Page | 2 Introduction “Don’t sell your customers goods that they are attracted to; sell them goods that will benefit them” - Konosuke Matsushita (Founder – Panasonic) The simplest way to define Marketing would be “To create profitable customer relations”. And a customer would only spend money on a product/service, if it creates value for him/her. So, in a way, marketing creates ‘VALUE’. Today, Marketing, more than anything else, is to identify and create a product/service that would be valuable to a customer and convey that message to the customer effectively. Much has been written about customer orientation, customer relationship management (CRM), Customer Lifetime Value (CLV) metrics, Customer Centric organization models, customer retention, customer care etc. And we see the poor customer is still the most dissatisfied lot. Customer value, in its most basic form, is merely the difference between the benefit receive from a product and the cost associated with that product. But the challenge for a marketer today, is to identify what value his product/service delivers to his target customer. Is it products...
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