Chapter 2 – Creating Market Value for Customers
Definition of Value – “can describe value as a the beliefs that a community shares and that
provide guidelines for how community members should think, act and feel in a given situation”
Determine market value of any product or service by what it can do to solve a problem for a
customer.
Official definition of market value “is the potential of a product or service to satisfy a customers’
wants and needs”
The market value of a product or service
Consists of a universal or a personal value, or both.
Universal values satisfy the basic needs of the customer.
Personal values vary from customer to customer.
Market value sought by users, buyers,payers
Users:
Universal value –performance
Personal Value – social and emotional ( group and individual specific)
Payers
Universal value – Price
Personal Value –Credit and financing ( group and individual specifc)
Buyers
Universal Value –service
Personal value - Convenience and personalisation
The Organisation’s perspective of measuring value
2 types of measurement
Customer satisfaction - old
Customer value - new
,The new approach ( customer value) focuses on how customers choose among competing
organisations.organisations must ask themselves the following:
What are the key buying factors that customers value when the choose
between our organisation and the competitors?
How do customers rate our performance verus that of the competitors?
The best way to accurately determine whether value has been added for the customers is to
quantify it in what is called the “value metrics process” This entails finding out the different
values that consumers expect from a product or service,that is creating a benchmark,
developing a strategy to deliver value to the customer and measuring whether the customers
expectations where met or exceeded.
Determining the expected value
- Conduct a consumer satisfaction index. Best done through questionnaire
- Build on the CSI using customer value management.
- Measures satisfaction in relation to price paid. Called customers perceived value
By using CVM organisations can determine the following:
-key buying factors
- how organisations rate against competitors
- relative importance is of these components to delivering customer value
Formulating a strategy for delivering value to the customer
Develop strategy to deliver value to the consumer. Have to convince top management o the
benefit of CVM. Then generate and implement action plans.
Measuring value delivery
This can be measured using CVM or Balanced Scorecard.
Core consumer outcome measures:
- Market share
- Consumer acquistion
- Consumer retention
- Consumer satisfaction
, - Consumer profitability
Investigating deviations and adapting strategy
In the last step,the organisation must determine if there any deviations and correct them. This
starts a new cycle of research.
Marketing implications of the concept of value
Value has been described as the only way that an organisation can differentiate itself
consistently from it’s competitors. Organisation must become market driven.
Value based marketing “ which is defined as the way in which the organisation designs and
manufacturs useful products that it delivers on time while maintain a more than satisfactory
level of service for an extended period.
,Chapter 3 – Market Characteristics
Market characteristics consist of:
Country’s climate
Economy
Government
Technology
Demographical composition
Societal changes
Demographical Characteristics
Demographics the study of people’s vital statistical: age, race, ethnicity, location.
SA’s population is divided by 2 broad catagories by census SA: individuals and Households.
Economic Factors influencing Consumer Behaviour
The economic areas of biggest concern to marketers are inflation and the impactof the interest
rates and currency fluctuations on prices and consumer demand.
Governmental factors influencing consumer behaviour
Every aspect of the marketing mix is subject to laws & restrictions. Failure to comply can have
major consequences.
Business needs Government regulation to protect innovators of technology, to promote the
interests of society in general, to protect one business from another and to protect consumers.
In turn Government need businesses so they can generate taxes.
Legislation affecting marketing activities:
Promotion competition
Limiting competition
Protecting consumer rights
SA government is trying to create informed and well educated consumers.
,Physical conditions influencing consumer behaviour
2 aspects playing an increasingly important role in terms of the physical envrioment: Climate
and environmental deterioration.
Societal factors influencing consumer behaviour
Most difficult external variable to forecast, influence or integrate into marketing plans
Societal factors include our attitudes, values and lifestyle.
Technological factors influencing consumer behaviour
It has a pervasive influence. The rate of development is increasing exponentially.
Affect consumer behaviour in Sa in the following ways:
The way people access information
The way marketers communicate
The way consumers’ purchase processes are changing to take place online via the
internet and Credit cards
The way consumers can buy anything from anywhere in the world thereby increasing
competition for south African companies.
Developing trends that influence consumer Behaviour
Green Marketing
Due to a growing concern for the environment marketers are establishing a different approach
to marketing. This approach is called green marketing.
Generally involves the following:
Developing products whose production, use or disposal is less harmful to the
environment.
Developing products that have a positive impact on the environment
, Linking the purchase of a product to an environmental organisation or event.
Cause-related marketing
The term cause related marketing is sometimes used interchangeably with “social Marketing”.
To refer to the application of marketing principles and tactics, and to advance a cause such as
a charity , an ideology or an activity. There is an absence of the “ profit motive”
Cause related marketing ties a company and its products to an issue or cause with the goal of
improving of sales or the corporate image while providing benefits to the cause.
It markets to the consumer values.
Marketing to gay and lesbian consumers
Any firm that desires to capture the loyalty of the gay community must ask itself the following
questions when approaching the market:
Must we modify our products in any way to meet the needs of this market?
Should we advertise in gay orientated media using our standard ads?
Should we advertise in gay media using ad with gay themes?
To what extent should we be involved in gay community activities?
Should our major media ads include ads with gay themes?
, Chapter 4 – Culture and Subculture
The Nature of culture
Culture is society’s personality
Culture, as a ‘complex whole’, is a systemof interdependent component.
Culture is not only a narrow view of people’s activities, it extends to include all activities that
characterise the behaviour of particular communities of people.
Customer Beliefs and values
Customs are overt modes of behaviour that constitute culturally approved or acceptable ways
of behaving in specific conditions. Customs consist of daily or routine behaviour
While beliefs and values are guides for behaviour, customsare usual and acceptable ways of
behaving.
Beliefs consist of the great number of thought or expressed statements that reflect a person’s
particular knowledge and assessment of something. Values are also beliefs.
However, values differ from beliefs in that each one must meet the following criteria:
They are relatively few in number
They serve as a guide for culturally appropriate behaviour
They are enduring or difficult to change
They are not tied to specific objects or situations
They are widely accepted by the members of society.
Needs and culture
Culture exists to satisfy the needs of people in a society. It offers order,direction and guidance
in all phases of human problem solving by providing tried and trusted methods of satisfying
physiological, personal and social needs.
Learning and culture
Definition of Value – “can describe value as a the beliefs that a community shares and that
provide guidelines for how community members should think, act and feel in a given situation”
Determine market value of any product or service by what it can do to solve a problem for a
customer.
Official definition of market value “is the potential of a product or service to satisfy a customers’
wants and needs”
The market value of a product or service
Consists of a universal or a personal value, or both.
Universal values satisfy the basic needs of the customer.
Personal values vary from customer to customer.
Market value sought by users, buyers,payers
Users:
Universal value –performance
Personal Value – social and emotional ( group and individual specific)
Payers
Universal value – Price
Personal Value –Credit and financing ( group and individual specifc)
Buyers
Universal Value –service
Personal value - Convenience and personalisation
The Organisation’s perspective of measuring value
2 types of measurement
Customer satisfaction - old
Customer value - new
,The new approach ( customer value) focuses on how customers choose among competing
organisations.organisations must ask themselves the following:
What are the key buying factors that customers value when the choose
between our organisation and the competitors?
How do customers rate our performance verus that of the competitors?
The best way to accurately determine whether value has been added for the customers is to
quantify it in what is called the “value metrics process” This entails finding out the different
values that consumers expect from a product or service,that is creating a benchmark,
developing a strategy to deliver value to the customer and measuring whether the customers
expectations where met or exceeded.
Determining the expected value
- Conduct a consumer satisfaction index. Best done through questionnaire
- Build on the CSI using customer value management.
- Measures satisfaction in relation to price paid. Called customers perceived value
By using CVM organisations can determine the following:
-key buying factors
- how organisations rate against competitors
- relative importance is of these components to delivering customer value
Formulating a strategy for delivering value to the customer
Develop strategy to deliver value to the consumer. Have to convince top management o the
benefit of CVM. Then generate and implement action plans.
Measuring value delivery
This can be measured using CVM or Balanced Scorecard.
Core consumer outcome measures:
- Market share
- Consumer acquistion
- Consumer retention
- Consumer satisfaction
, - Consumer profitability
Investigating deviations and adapting strategy
In the last step,the organisation must determine if there any deviations and correct them. This
starts a new cycle of research.
Marketing implications of the concept of value
Value has been described as the only way that an organisation can differentiate itself
consistently from it’s competitors. Organisation must become market driven.
Value based marketing “ which is defined as the way in which the organisation designs and
manufacturs useful products that it delivers on time while maintain a more than satisfactory
level of service for an extended period.
,Chapter 3 – Market Characteristics
Market characteristics consist of:
Country’s climate
Economy
Government
Technology
Demographical composition
Societal changes
Demographical Characteristics
Demographics the study of people’s vital statistical: age, race, ethnicity, location.
SA’s population is divided by 2 broad catagories by census SA: individuals and Households.
Economic Factors influencing Consumer Behaviour
The economic areas of biggest concern to marketers are inflation and the impactof the interest
rates and currency fluctuations on prices and consumer demand.
Governmental factors influencing consumer behaviour
Every aspect of the marketing mix is subject to laws & restrictions. Failure to comply can have
major consequences.
Business needs Government regulation to protect innovators of technology, to promote the
interests of society in general, to protect one business from another and to protect consumers.
In turn Government need businesses so they can generate taxes.
Legislation affecting marketing activities:
Promotion competition
Limiting competition
Protecting consumer rights
SA government is trying to create informed and well educated consumers.
,Physical conditions influencing consumer behaviour
2 aspects playing an increasingly important role in terms of the physical envrioment: Climate
and environmental deterioration.
Societal factors influencing consumer behaviour
Most difficult external variable to forecast, influence or integrate into marketing plans
Societal factors include our attitudes, values and lifestyle.
Technological factors influencing consumer behaviour
It has a pervasive influence. The rate of development is increasing exponentially.
Affect consumer behaviour in Sa in the following ways:
The way people access information
The way marketers communicate
The way consumers’ purchase processes are changing to take place online via the
internet and Credit cards
The way consumers can buy anything from anywhere in the world thereby increasing
competition for south African companies.
Developing trends that influence consumer Behaviour
Green Marketing
Due to a growing concern for the environment marketers are establishing a different approach
to marketing. This approach is called green marketing.
Generally involves the following:
Developing products whose production, use or disposal is less harmful to the
environment.
Developing products that have a positive impact on the environment
, Linking the purchase of a product to an environmental organisation or event.
Cause-related marketing
The term cause related marketing is sometimes used interchangeably with “social Marketing”.
To refer to the application of marketing principles and tactics, and to advance a cause such as
a charity , an ideology or an activity. There is an absence of the “ profit motive”
Cause related marketing ties a company and its products to an issue or cause with the goal of
improving of sales or the corporate image while providing benefits to the cause.
It markets to the consumer values.
Marketing to gay and lesbian consumers
Any firm that desires to capture the loyalty of the gay community must ask itself the following
questions when approaching the market:
Must we modify our products in any way to meet the needs of this market?
Should we advertise in gay orientated media using our standard ads?
Should we advertise in gay media using ad with gay themes?
To what extent should we be involved in gay community activities?
Should our major media ads include ads with gay themes?
, Chapter 4 – Culture and Subculture
The Nature of culture
Culture is society’s personality
Culture, as a ‘complex whole’, is a systemof interdependent component.
Culture is not only a narrow view of people’s activities, it extends to include all activities that
characterise the behaviour of particular communities of people.
Customer Beliefs and values
Customs are overt modes of behaviour that constitute culturally approved or acceptable ways
of behaving in specific conditions. Customs consist of daily or routine behaviour
While beliefs and values are guides for behaviour, customsare usual and acceptable ways of
behaving.
Beliefs consist of the great number of thought or expressed statements that reflect a person’s
particular knowledge and assessment of something. Values are also beliefs.
However, values differ from beliefs in that each one must meet the following criteria:
They are relatively few in number
They serve as a guide for culturally appropriate behaviour
They are enduring or difficult to change
They are not tied to specific objects or situations
They are widely accepted by the members of society.
Needs and culture
Culture exists to satisfy the needs of people in a society. It offers order,direction and guidance
in all phases of human problem solving by providing tried and trusted methods of satisfying
physiological, personal and social needs.
Learning and culture
