Lecture unit 02 Flashcards
What is the only valid definition of business purpose according to Peter Drucker?
- To create a customer, emphasizing that value is not just in the product or service
- it is always utility that is what it does for the customer
How is utility defined in economics?
— A measure of preferences over some set of goods and services,
— representing the satisfaction experienced by the consumer
How are customers’ revealed preferences determined?
Through their willingness to pay, revealing underlying relative utilities from observed choice
What is customer valuation according to Woodruff (1997)?
- “a customer perceived preference for and evaluation of those products’ attributes, attribute performances,
- and consequences arising from use that facilitate (or block) achieving the customer’s goals and purposes in use situations.”
How do consumers typically decide which product to purchase?
- purchase the item with the highest customer value among all offerings in the marketplace
- weighing the value against similar products and services that provide similar benefits
How can customer valuation be measured?
- by what customers exchange economically for options that satisfy a want or need,
- by what customers intend to exchange and
- by what customers should be willing to exchange if rational
–>This valuation is hidden in the minds and must be reveald or inferred through measurements
What equation represents customers’ valuation?
Customers’ Valuation = Customer’s Benefits - Customer’s Costs
(customer value is not consumer surplus)
What are the benefits and costs of Customer Valuation?
Benefits:
- functional (product does the job)
- psychological (Nike shoes prov. social status)
- economic (Wal-mart offerrs at everyday low prices)
Costs:
- monetary (e.g. to get access to the product/service)
- perceived risk
- inconvience
Distinguish customer valuation, firm´s profit and consumer surplus?
Customer Valuation is the value of the product to the customer
- Consumer surplus = Value of the product - Price charged by the firm
- Profit firm = Price - costs to produce the good
What roles are involved in the consumer buying process? (BIUDI)
- Buyer: makes the actual purchase
- Initiator: suggest the idea of buying
- User: uses the product or service
- Decider: decides what, when, where, or how
- Influencer: adivce influences the purchase
How does the organizational buying process compare to personal purchasing? (BADIGU)
- Buyer: places the order
- Approvers: authorize the purchase of
- Deciders: peoplle who make a (group) purchase decisiion
- Influencers: provide info or advice, or define specification
- Gatekeepers: have the power to sanction or block a supplier
- User: actually uses the product/service
Customer need can be characteriszed by its..?
- Subject and importance
- Temporal aspects
- Information requirements
What are the primary bases for a person’s perception of a need? (What are the 4 hierarchies of Maslow)
Primary bases for a person’s perception of a need include:
- Maslow’s hierarchy of needs, which consists of physiological, security, status, and self-actualization needs
What generates a customers motivation to fulfill various need states?
- Customers’ processing of internal and external stimuli generates motivation to fulfill various need states
- External stimuli include advertising, sales force, or sales promotion.
In what terms can a need be described?
physical, social, and status dimensions.
