1. Creating Market Values for the Customer
CUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVE
PART 4: Building Loyalty and Customer Value
CHAPTER 13
Creating Market Values
for the Customer
Copyright © 2002 by South-Western.
All rights reserved.

2. Value Delivery Value delivery has two dimensions: Effectiveness
Efficiency
Copyright © 1999 by Thomas Southwestern. All rights reserved.

3. Dimensions of Value Delivery
Efficiency
(Resource conservation)
POOR
GOOD
Effectiveness
(Need/Want Fulfillment)
Best Value
Poor Value
Efficiency Value
Copyright © 1999 by Thomas Southwestern. All rights reserved.

4. Tools for Creating Customer Value
User Values
Performance
Social
Emotional
Quality improvement
Innovations
Mass customization
Warranties and guarantees
Price exclusivity
Limited availability
Social image ads
Exclusive offerings
Emotional communications
Payer Values
Price
Credit
Financing
Low price from lower margins
Low price from increased productivity (achieved through economies of scale, modernized plant, automation, business process re-engineering)
Acceptance of credit cards
Offering of own credit card
Deferred payment
Leasing
Customized financing
Buyer Values
Service
Convenience
Personalization
Product display and demonstration
Knowledgeable salesperson
Responsiveness
User support and maintenance service
Convenient point-of-access
Automated transaction recording
Personal attention and courtesy
Interpersonal relationships
Copyright © 1999 by Thomas Southwestern. All rights reserved.

5. Creating Market Values for Users
The user is primarily concerned that the product or service performs as desired and that its use delivers social and emotional benefits
Copyright © 2002 by South-Western.
All rights reserved.

6. Performance Value Quality improvement Product innovations
Mass customization
Warranties and guarantees
Copyright © 1999 by Thomas Southwestern. All rights reserved.

7. R & D Leads to More Sales from New Products
0.01
0.07
1.6
3.3
Copyright © 1999 by Thomas Southwestern. All rights reserved.

8. New Product Activity Leads to Gains in Market Share
0.01 4 12
Copyright © 1999 by Thomas Southwestern. All rights reserved.

9. Social and Emotional Values
Prestige pricing
Limited availability
Social-image-based marketing communications
New exclusive offerings
Emotional advertising
Copyright © 1999 by Thomas Southwestern. All rights reserved.

10. Creating Market Values for Payers
The types of value most important to payers involve low-cost and ease of making payments
Copyright © 2002 by South-Western.
All rights reserved.

11. Price Value To reduce price, companies can opt for two approaches:
Accept lower margins
Reduce their own costs of production by improving productivity
Copyright © 1999 by Thomas Southwestern. All rights reserved.

12. Low Price from Lower Margins
The lower-margin approach consists of selling at a low-profit margin to attract customers
Strategic insight
Copyright © 1999 by Thomas Southwestern. All rights reserved.

13. Low Price from Increased Productivity
Economies of scale
Modernized plant
Automation
Business process reengineering
Copyright © 1999 by Thomas Southwestern. All rights reserved.

14. Credit And Financing Values
Sellers may accept credit cards issued by third parties or banks
Sellers may issue their own credit cards or give credit by other instruments
Sellers may allow a delayed or deferred payment
Copyright © 1999 by Thomas Southwestern. All rights reserved.

15. Creating Market Values for Buyers
In general, buyers are looking for good service before and after they make their selections
In addition, they want their purchases to be convenient, not too time-consuming, and in a time and place that fits their schedule
Copyright © 2002 by South-Western.
All rights reserved.

16. Service Value The service value is created by the distribution system
Pre-purchase phase
Post-purchase phase
Copyright © 1999 by Thomas Southwestern. All rights reserved.

17. Service in the Pre-purchase Phase
Marketers can offer this value by:
Having the product on display or ready for demonstration and/or for trial use
Hiring knowledgeable and responsive salespersons who can answer customer questions
Copyright © 1999 by Thomas Southwestern. All rights reserved.

18. Service in the Post-purchase Phase
Service in the post-purchase phase refers to all the assistance a marketer can provide to maintain the product use-ready
Product-use advice and support
Product maintenance
Copyright © 1999 by Thomas Southwestern. All rights reserved.

19. Convenience Value and Personalization Value
Convenient points of access
Automated transaction recording
Interpersonal relationships
Copyright © 1999 by Thomas Southwestern. All rights reserved.

20. Measuring Value Delivery
Find out what customers want
Organize to deliver those values
Measure how well, in customer perceptions, those values have been delivered
Copyright © 1999 by Thomas Southwestern. All rights reserved.

21. A Process for Determining Customer Value
1. What do target customers value?
2. Of all the value dimensions that target customers want, which are most important?
3. How well (poorly) are we doing in delivering the value that target customers want?
4. Why are we doing poorly (well) on important value dimension?
5. What are target customers likely to value in the future?
Copyright © 1999 by Thomas Southwestern. All rights reserved.

22. Assessment of the Customer’s Final Judgment
The firm understands my needs and preferences well.
I can trust the firm not to take advantage of me as a customer.
The firm values and shows its appreciation for my business.
The firm takes specific actions to keep me as a customer.
I can identify myself with the firm’s products and its actions.
The firm can count on me as its supporter.
I enjoy dealing with the employees of this firm.
I love this firm’s products.
I love to do business with this firm.
I expect to continue my relationship with this firm for a long time.
Please rate the following statements on a 0-10 scale where 0 means you disagree entirely, and 10 means you agree wholeheartedly.
Copyright © 1999 by Thomas Southwestern. All rights reserved.