Locking on the Value Proposition for Customers
July 15, 2013
In my office, I hung a newspaper article prominently on my wall. This 2010 article showcases the top 100 government officials in my area. Surprisingly, the university basketball coach was the top official, at over $2 million. Following suit was a short list of athletic coaches followed by highly noted professors and administrators.
This amazing list furthered stimulated my interest in determining the value of individual skill sets. In some other areas of the country, region, or state, someone would probably determine that these same jobs did not warrant the same financial worth. In fact, individuals within the same organization with the same title and similar professional backgrounds can be found making significant differences in salary. Given these realities, it is easy to see that customer value propositions differ.
Today’s companies must become adapted at determining customer value. However, all customers are not the same. In fact, globalization has created all types of problems for businesses. One of the issues is how to stay ahead of the competition by exploring new markets while keeping the same customer base. This action is not easy.
Many businesses build their profitability on this simple equation. Companies seek to reduce their inputs (outsourcing labor, better technologies) to obtain greater profitability. Yet, the process is often pretty self-serving with little regard to the customer and lesser value on employees.
Therefore, many people might insist that some business simply stumble on what customer value actually is and how it affects their business. For this discussion, value is defined as the net bundle of benefits the customer derives from a product of service.
Mark Johnston and Greg Marshall, authors of Relationship Selling, state that the starting point for learning about relationship selling is to understand the customer. A value lesson is learning that the customer is the center point for creating value.
Paul Peter and James Donnelly, authors of Marketing Management, suggest that the starting point in the buying process is the consumer’s recognition of an unsatisfied need. Therefore, the focus must go back to the customer for any sustainable business success. They must be deliberate with their connections with customers and value.
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Being strategic conscious about these business relationships is not simple. Ken Favaro, author of Put Value Creation First, further maintains that putting value creation consistently first requires leadership skills, discipline, and perseverance.
He further challenges organizations to demand higher standards from managers who would jeopardize these business relationships. When organizations place value creation as a high priority, organizations will beat their competition.
Given the complexity of customer value, how do businesses stay connected with customers and their ever changing wants and needs?
© 2013 by Daryl D. Green
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July 24, 2013 at 6:22 pm
Mimi,
Commenting on your statement, “A business should be able to identify with the customer’s needs and know what the consumer will pay for something” may be more reality than we know. Last week the Wall Street Journal reported that Mac users browsing travel sales site Orbitz.com often saw different and sometimes costlier travel options than their counterparts using PCs. According to the article, Orbitz knows that Mac users spend up to 30 percent more per night on hotels booked online than PC users [1]. What else do online retailers know about us?
Corporate data minors are recording and selling keystrokes to track what, when, and our tolerable price points. Your browser history and spending habits is a valuable asset for retailers. Prices can be changed based your location, what kind device your browse with, average regional incomes, past online shopping history, etc. Quality aside, retailers are out to make as much money as they can.
[1] Safdar, K. (June 2012). Online Retailers Track Consumer Spending Habits To Get Wealthier Customers To Spend More. The Huffington Post. Retrieved from http://www.huffingtonpost.com/2012/06/29/online-retailers-track-spending-habits_n_1637679.html
July 31, 2013 at 12:42 am
Regarding the concept that the customer should be the center point in value creation, marketing research needs to use digital tools to be in touch with digital customers. Most customers today shop online, review products on social media, research products on the same platform, and share what they think about the product (Morris, 2013). Market research is enhanced by the digital market place since the organization will get a strong understanding of the consumer’s behavior. The organization will be able to understand the customer’s perceptions, feelings, and their purchasing behavior. The digital age allows a company to stay in touch with customer’s wants and needs. Using online surveys, social media, smart phone apps, and online news letters give companies the ability to quickly retrieve and dissect customer data (Hendricks, 2013). The internet has drastically changed the gathering of critical consumer information necessary for the provision of value products for the customer.
References
Hendricks, D. (2013). High tech ways to stay in touch with customers. Retrieved from http://www.huffingtonpost.com/drew-hendricks/tech-customer-service_b_3362102.html
Morris, B. (2013). More consumers prefer online shopping. Retrieved from http://online.wsj.com/article/SB10001424127887324063304578523112193480212.html
July 31, 2013 at 8:50 pm
Regarding the concept that the customer should be the center point in value creation, marketing research needs to use digital tools to be in touch with digital customers. Most customers today shop online, review products on social media, research products on the same platform, and share what they think about the product (Morris, 2013). Market research is enhanced by the digital market place since the organization will get a strong understanding of the consumer’s behavior. The organization will be able to understand the customer’s perceptions, feelings, and their purchasing behavior. The digital age allows a company to stay in touch with customer’s wants and needs. Using online surveys, social media, smart phone apps, and online news letters give companies the ability to quickly retrieve and dissect customer data (Hendricks, 2013). The internet has drastically changed the gathering of critical consumer information necessary for the provision of value products for the customer.
Hendricks, D. (2013). High tech ways to stay in touch with customers. Retrieved from http://www.huffingtonpost.com/drew-hendricks/tech-
customer-service_b_3362102.html
Morris, B. (2013). More consumers prefer online shopping. Retrieved from http://online.wsj.com/article/SB10001424127887324063304578523112193480212.html/July 31, 2013
July 20, 2013 at 11:13 pm
Meeting the objective needs and subjective wants of customers to drive sales is the basis of most businesses (Millett, 2007). Therefore, it is very important to know how to stay connected with customers. Before the technological advances we have today, talking directly to customers was the best way to find out their needs and wants. However, this does not work as well today since there are online ordering options that prevent face-to-face customer interaction. However, while the internet has removed a lot of face-to-face contact between the customer and the company, it has also provided companies with something very valuable – online reviews. Reading and responding to online customer reviews would be a great way for companies to stay connected with their every changing needs and wants.
Millett, T. (2007). Meeting Customer Needs and Wants. Retrieved from http://ezinearticles.com/?Meeting-Customer-Needs-And-Wants&id=795990
July 21, 2013 at 6:55 pm
To your point, “the customer is the center point for creating value”, qualitative marketing research has to stay in touch with the digital customer with digital tools. Today’s consumers shop online, endorse or reject products through social networks, write blogs, review products, research products, and share product opinion within their mobile society. The digital market place is the perfect environment for businesses to conduct qualitative research that provides understanding about consumer behavior. Qualitative research is used to understand the feelings, the perceptions, and the repeat purchasing behavior which is the very core of consumer value. Are they getting satisfying quality and a tolerable price point?
Product value is defined as the difference between what a customer gets from a product, and what he or she has to give in order to get it (BusinessDictionary.com). The power of the internet has changed how businesses gather the critical data needed to provide the customer with valued products.
Unknown (January 2011), Changing the Odds: How Online Video-Based Market Research Can Be a Game-Changer for Product Design, Qualvu.com. Retrieved from http://www.qualvu.com /announcements/changing-the-odds-how-online-video-based-market-research-can-be-a-game-changer-for-product-design/.
July 21, 2013 at 8:05 pm
I found this definition to be the most informative. “In most places, customer value has been defined as a tradeoff between (customer-perceived) quality and (customer-perceived) price. Perceived quality, in turn, has been conceptualized as buyers’ “judgment about a product’s overall excellence or superiority”” (Desarbo, Jedidi, & Sinha ,2001, p. 846). Consumers are the beginning and the end to developing for determining consumer value. I think what was stated in the article about some companies simple stumbling upon customer value is true. However, as companies grow, and competition becomes fierce they must come to understand and develop customer value in order to compete. This big problem is that customer value changes over time and what was important now may no longer become relevant then. Companies cannot continually guess about what consumers want because sooner or later the companies will get it wrong.
Globalization has proved that consumer value is not universal. Demographics determine what people value from one group to another. Mass marketing and production have limited appeal because few people want the same thing that another person has. This change is leading to a focus on individual needs and not just specific groups.
DeSarbo, W. S., Jedidi, K., & Sinha, I. (2001). Customer Value Analysis In A Heterogeneous Market. Strategic Management Journal, 22(9), 845-857.
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Dawn Iacobucci, in his book MM, 2012 writes that just as customers assess the value of their purchases, companies are assessing customers in terms of their worth to the company. Some customers are more costly to acquire, and others more costly to retain (p.182). It is the belief that customer satisfaction should ultimately result in more sales. As positive words-of-mouth converts more customers to buyers, the segment of buyers gets larger and larger. It is difficult to please all customers with a single market offering, which is why a business has to identify segments to serve (p.179).
Customer satisfaction is not a goal in itself. Companies are in business to make money. To stay connected with customers and their ever changing wants and needs, businesses have to recognize that lower income consumers are price sensitive but they will pay for products if they deliver a benefit that is worth the money. For an organization to be focused on building relationships with customers, employees’ attitudes and actions must be customer oriented (Lamb, 2012, p.7).
Dear Helen,
I really enjoyed reading your blog. I also like the statement you made, “To stay connected with customers and their ever changing wants and needs, businesses have to recognize that lower income consumers are price sensitive but they will pay for products if they deliver a benefit that is worth the money”. A business should be able to identify with the customers needs and know that the consumer will pay for something that they really want. According to Peter Donnelly (2011) suggested that many products, consumers may have an implicit price range, and as long as prices fall within it, price is not even evaluated as a purchase criterion”. Organizations are able to stay connected with their customers by doing what it takes to meet the customer needs.
References:
Ducam, P. (2011). Consumer Behavior and Pricing Strategy. New York: McGraw-Hill Irwin.