Value and strategic perspectives on business markets Flashcards
Defining value
We define value in business markets as the perceived worth in monetary units of a set of economic, technical, service and social benefits received by a customer form in exchange for the price paid for a product offering, taking into consideration the available alternative suppliers’ offerings and prices (Anderson et al., 1993)
Customer-perceived value in a key supplier relationship is “a formative higher-order construct that represents the trade-off between the benefits and the costs perceived in the supplier’s core offering, in the sourcing process, and at the level of a customer’s operations, taking into consideration the available alternative supplier relationships” (Ulaga and Eggert, 2006)
The customer is always a co-creator of value. There is no value until an offering is used - experience and perception are essential to value determination (Lush et al., 2007)
What is Value proposition?
Describe the paper:
Article: Stabell, C. B. and Fjeldstad, Ø. D. (1998). Configuring value for competitive advantage: On chains, shops, and networks. Strategic Management Journal, Vol. 19(5), pp. 413-437.
Overall, the article highlights the importance of strategic management in configuring value for competitive advantage. It emphasizes the need for organizations to align their chains, shops, and network relationships to optimize value creation. By doing so, organizations can enhance their competitiveness and achieve sustainable success.
The article contains three different approaches:
- The value chain
- The value shop
- The value network
The value chain
Chains refer to the sequence of activities that transform inputs into outputs. The article highlights the importance of understanding and managing these chains effectively. It suggests that organizations should focus on optimizing the coordination and integration of activities within the chain to enhance value creation.
The value shop
Shops represent the individual units or departments within an organization that perform specific tasks or activities. The article emphasizes the significance of aligning these shops with the overall strategic objectives of the organization. By configuring the shops in a way that supports the chain’s goals, organizations can enhance their competitive advantage.
Value creation logic:
Value information asymmetry: When “seller” can help the “customer”, without the customer being able to proofcheck it. Due to missing knowledge.
Configured to deal with unique cases: It might be possible for others to fix/handle it. However a professional is needed to diagnose/recognize it.
Cyclical, iterative and interruptable activities: One solution might result in a new problem. (More on page 9-11)
Primary activities:
Problem finding and acquisition: Activities associated with the recording, reviewing, and formulating of the problem to be solved and choosing the overall approach to solving the problem
Problem-solving: Activities associated with generating and evaluating alternative solutions
Choice: Activities associated with choosing among alternative problem solutions.
Execution: Activities associated with communicating, organizing and implementing the chosen solution
Control and evaluation: Activities associated with measuring and evaluating to what extent implementation has solved the initial problem statement.
The value network
Networks refers to the interdependencies and relationships between organizations in a networked environment. The article suggests that organizations should leverage these network relationships to create value. By collaborating and sharing resources, organizations can gain a competitive edge in the market.
Primary activities
Network promotion and contract management consists of activities associated with inviting potential customers to join the network, selection of customers and that are allowed to join and the initialization, management and termination of contracts governing service provisioning and charging.
Service provisioning consists of activities associated with establishing, maintaining, and terminating links between customers and billing for value received. The links can be synchronous as in telephone service or banking. Billing requires measuring customers’ use of network capacity both in volume and time.
Network infrastructure operation consist of activities associated with maintaining and running a physical and information infrastructure. The activities keep the network in an alert status, ready to serve customer requests.
Examples of each different type
Value chain:
- Dell Technologies: Dell follows a value chain model where it designs, manufactures, and sells computer hardware and software products directly to customers. The company manages its supply chain, production, and distribution processes to optimize value creation and deliver customized solutions to its clients.
Value shop:
- McKinsey & Company: McKinsey is a global management consulting firm that operates as a value shop. It provides specialized expertise and advisory services to clients across various industries. McKinsey’s consultants possess deep knowledge and skills in specific areas, allowing them to deliver tailored solutions and value-added insights to their clients.
Value network:
- Alibaba Group: Alibaba is an e-commerce conglomerate that operates as a value network. It connects buyers and sellers through its online platforms, such as Alibaba.com and Taobao, facilitating transactions and enabling businesses to reach a global customer base. Alibaba’s value network includes various stakeholders, such as suppliers, manufacturers, distributors, and consumers.
Describe the article
Witell, L., Kowalkowski, C., Perks, H., Raddats, C., Schwabe, M., Benedettini, O. and Burton, J. (2020). Characterizing customer experience management in business markets. Journal of Business Research, Vol. 116, pp. 420-430.
The text you provided is a brief excerpt from the PDF file that discusses the challenges and implications of customer experience management (CEM) in business markets. The text mentions five specific challenges that businesses face in managing customer experience:
1)mismatches in business relationships,
2)siloed customer experiences,
3)Mismatches across the customer journey,
4)Lack of touchpoint control
5) Dynamics of customer experience
These challenges are related to some “touchpoints” in the customers journey stage, the touchpoints is on the picture
The first challenge
The first challenge, “mismatches in business relationships”, refers to situations where suppliers and customers have differing views on the nature of their relationship, resulting in poor customer experiences or lack of profitability for the supplier. The text provides an example of how Shell simplified its range of solutions and touchpoints for less profitable customers in their portfolio, resulting in these customers realizing the value in their experiences was diminishing.
The second challenge
The second challenge, “siloed customer experiences”, refers to situations where individual and collective actors in the customer organization have varying views on the value of an offering, depending on their function and job level. The text provides an example of how a fleet operator’s drivers were unhappy about an insurance company fitting telematics to their trucks, but their employer realized value from this.
The thrid challenge
The third challenge, “Mismatches across the customer journey,” refers to the varying experiences that individual and collective actors within the customer organization have at different stages of the customer journey. This leads to differences in perception between individuals and functional units. The text provides an example of university procurement managers having a positive purchase experience when buying managed print services, while users of the services experience inconveniences such as inconvenient printer locations, paper shortages, and slow response to faults. The implication is that greater attention should be paid to the needs of all actors involved in the procurement process, and measures can be put in place to ensure user support mitigates any drawbacks of new offerings.
The fourth challenge
The fourth challenge, “Lack of touchpoint control,” refers to a situation where a supplier has limited ability to ensure the desired behavior of customers and third parties because other organizations can determine or influence what actors will do. This can occur due to powerful customers or intermediaries, the scale of the customer base, remote geographic location of customers, or the technical skills of the partner in delivering complex goods and services. The text suggests that this challenge can potentially arise when a supplier uses a third-party partner as a provider to customers, or when the customer controls the touchpoint.
The fifth challenge
Describe the article
Stewart, M. D., Narus, J. A., Roehm, M. L. and Ritz, W. (2019). From transactions to journeys and beyond: The evolution of B2B buyingprocess modelling. Industrial Marketing Management, Vol 83, pp. 288-300.
The article examines the B2B purchasing process, which has changed significantly in recent years. So the article is investigating the change in the B2B behavior and how the purchasing process has changed with the behavior. The reason why is to get a better understanding of why new models B2B buying process models have developed.
The article looks into the top 30 articles that have investigated the B2B buying process model to see how the change has been over the years. By that the authors could see that from the early stages of buying models it was only “transactions”, whereas it is today more “customer journey” experiences that are important.
The conclusion of the article is that each theme has evolved from a more strictly economic behavior to a more behavioral/psychological behavior. The reason for this is that a buying decision has a higher influence today.
There are 6 different purchasing themes there is investigated into in the text
- Transactions
- Situations
- Influences
- Responses
- Relationships
- Networks
- Journeys
Examples of each of the themes
Models from slides (buy grid model)
(NOTER OM DENNE MODEL MÅ GERNE SMIDES IND HVIS HAVES)
Model from slides (An integrative model of industrial buyer behavior)
The dotted lines, is feedback loops. Going back to see whether you are aiming the customer right, are their expectations met
If the expectations are met, you will look at the feedback loops to see whether the expectations are met, if yes you will do the same thing again, if not you will go back to change something to meet the customer’s expectations, so that the customer journey will be positive and the customers will feel aligned with the process and feel happy.
Model from slides (Major elements of organizational buying behavior)
Within this model evolution is happening in all steps
(HVIS I HAR NOGLE NOTER OMKRING DEN MODEL MÅ I GODT SMIDE DET IND)
Model from slides (The relationship development process)
Not only focus on transactions as the relationship in becoming more important in the buying process to create more value.
Focus on other factors, such as building a relationship with your customers. This will make the seller and the buyer more dependent on each other. Creating a relationship will increase the commitment between the parties, which can lead to shared values which can lead to support joint investments in the relationship.
Model from slides (Actors, resources and activities, ARA-model)
(HVIS I HAR NOGLE NOTER TIL DENNE MODEL MÅ I GERNE SMIDE DEM IND)
Model from slides (Streamlining the decision journey)
This model is linked with the model of “The relationship development process” The commitment to each other is created in the bonding process, a good bonding will make each party more willing to commit to each other. A higher level of commitment can lead to a higher level of positive outcomes which creates more value for the parties.
Implications of customer journeys
