week 4 Flashcards
how does marketing help create value
- Production-oriented era: most firms believed a good product would sell itself
- Sales-oriented era: firms found an answer to overproduction by focusing on sales
- Market-oriented era: the focus was on what customers wanted.
- Value-based era: maintains the market orientation but also includes a focus on giving
greater value than the competition.
what is the concept of customer value
Value means different things to different people.
Value can be measured by what a customer exchanges for various options that can
satisfy a want or a need.
For most customers, value is a function of the benefit relative to the price paid.
Value = Benefits - Price
what are benefits and price in accordance with the cncept of customer value
benefit:
Functional: i.e., the product “does the
job”
Psychological: i.e., Nike shoes
provide social status
Economic: i.e., Walmart offers
branded products at everyday low
prices
price:
Monetary: i.e. $, euro, £
Perceived risk
Inconvenience
what are perceived risks
performance, financial, social, physiological, psychological
what are customer needs and customer value measurement
see diagram
what is subject and importance of need
Subject and importance of a need are the
primary bases for a person’s perception of
the need.
Needs higher up in the hierarchy are more
crucial than those farther down.
NEC positioned its mobile phone as a safety
device especially for women to place it’s
importance higher in the hierarchy
what is value measurement
objective measures:
- internal eng assessment
- indirect survey qs
- field value in use assessment
perceptual measures
- unconstrained measures
– focus grps, direct survey qs, important ratings
- constrained measures
– conjoint analysis, benchmarking
behavioural measures
- choice models
- data mining
what are should do measures in objective measurement
Internal engineering assessment
evaluations by the selling firm’s own managers and engineers based on lab
tests.
i.e., alpha test and computer simulation
Indirect survey questions
Firms often query customers about the value they place on satisfying a need or
resolving a problem.
Salespeople may ask company personnel about the effect of one or more changes in existing offerings on certain aspects of their needs or problems.
Field value-in-use (VIU) assessment
customer and supplier to conduct a joint value assessment.
i.e., to investigate how much customers are willing to pay for a new product, given the extra benefits that it offers.
what are plan to do measures with perceptual customer value
Unconstrained question measures
Focus groups: five to ten customers convene for a several hour discussion with
a trained moderator about their perceptions, attitudes, preferences, and usage
of a product or service.
Direct survey questions: A sample of customers who agree to complete a
questionnaire that includes a description of one or more potential product
offerings or concepts.
Importance ratings: The most popular approaches to measuring customer
value. Respondents receive a set of attributes and describe a product offering
and rate them according to their importance to them.
Constrained question measures
Conjoint analysis: the most widely used approaches, employing a field research
survey to ask respondents to provide their overall ratings for each of a set of
potential offerings.
Benchmarking: Respondents receive descriptions of a product offering and
represents the best available competitive product or service which thus serves
as a benchmark.
what are have-done measures with behavioural customer value
Choice models:
Using past behavior to infer or estimate the value of product characteristics that might
best explain or predict actual behavior.
Firms can observe choices and infer the value that best explains those choices.
Output is an estimate of importance weights and probabilities of each market
alternative for each customer.
Data mining:
Many organizations keep extensive records of customer purchases and these data can
be cross-matched with other data pertaining to customer characteristics.
Organizations can analyze the information to product segments according to customer
profitability, the range of products and services acquired, and so forth.
what is customer lifetime value (CLV)
The lifetime value of a customer generally equals the total profit a firm can expect
to earn from that customer during the time the firm continues to maintain an
ongoing relationship with the customer.
The growing availability of CRM (customer relationship management systems)
and other customer database permits marketers to track the behaviors of
individual customers in far more detail than ever before.
clv = (R1 - C1) + (R2 - C2) * d + … + (Rn - Cn) * d^n-1
R1 = revenue from customer in period 1
C1 = cost to acquire/service customer in period 1
d = 1/(1+r), where r is discount rate and n is anticipated lifetime of customer
check example of calculating clv
hehehe
what does clv mean by “present value of a stream of revenue a custimer produces”
focus on long term relationship not single transactions
what is the total lifetime vlaue of customer
economic value:
- (risk adjusted) revenue flow
- less cost to serve
relationship value:
- reference
- referral
- learning
- innovation, etc
how to calculate economic lifetime value
(expected) cost to serve cash flow
-
expected profit cash flow
-
risk adjustment
-
risk adjusted cash flow
= econ lv
(cost to serve cash flow and risk adjustment lower loyalty)
