HOW TO DELIVER

CUSTOMER-EXPERIENCED
VALUE
By:
Nanda Puspitha J. | 1011510001
Outline
Understanding value
When do the customers experience value?
Modelling customer percieved value
Sources of customer value
Customization
Value through marketing mix
Understanding Value

Customers types of sacrifice:

Money
Transaction cost
Psychic costs
Total Cost Ownership (TCO)
TCO looks not only at the costs of acquiring goods and
services, but also the full costs of using and servicing
them throughout their life, and ultimately disposing of
them. What is thought of as consumption can be broken
down into a number of activities or stages, including search,
purchase, ownership, use, consumption and disposal. TCO
is an attempt to come up with meaningful estimates of lifetime
costs across all these stages.
 Suppliers apply
EVC thinking in
Supplier responds by EVC requirement stage
Customer (Economic Value to The of consumption
takes TCO Customer): (search,
view for - Increasing sales purchase,
purchasing - Reducing cost ownership, use,
- Improving productivity consumption,
disposal)

EVC encourages suppliers to customize price

for customers on the basis of their particular
value requirements. In a B2B context, a
distinction is sometimes made between
economic value (satisfying economic needs at
low transaction costs) and social value
(satisfaction with the relationship with the
supplier)
 When Do Customers Experience Value?

Value-in-exchange Value-in-use Value-in-experience

Value-in-exchange logic customers can experience

suggests that value is Value-in-use holds that value as they interact with
created by the firm, value is realized only when or are exposed to any
embedded in products, customers possess, use, marketing, sales or service
distributed to the market and consume or interact with output of the firm
realized when those products the good or service. throughout the customer
are exchanged for money. lifecycle.
Modelling Customer-Percieved Value
Typologies of customer-percieved value

Jag Sheth and colleagues

Valarie Zeithaml Functional
the utility associated with an offerings functional,
value as low price
utilitarian or physical performance
value as Social
whatever the the offerings connectedness to one or more specific
customer wants social groups
in the product Emotional
value as the experienced when the offering arouses feelings or
quality obtained emotional states
for the price paid Epistemic
the utility acquired from an offerings capacity to arouse
value as what the
curiosity, provide novelty and/or satisfy a desire for
customer gets for knowledge
what the conditional
customer experienced as the result of the specific situation or set
sacrifices of circumstances facing the consumer
Morris Holbrook
 Sources of Customer Value
We can define value proposition as follows:

Michael Treacey and Fred Wiersema have suggested that successful

companies offer one of three value propositions to their customers:

Companies offering this value

Product Innovation
proposition tend to operate lean
manufacturing and efficient supply Companies that offer the product
Low price

chains, have close cooperation with innovation value proposition aim to

suppliers, rigorous quality and cost provide the best products, services
controls, process measurement and or solutions to customers.
improvement, and management of
customer expectations. E.g.: 3M, Intel, GSK, LG and
Singapore Airlines
E.g.: Wal-Mart, Giordano and
McDonalds
 Customization
Companies that offer this value
proposition are able to adapt
their offers to meet the needs of
individual customers.

E.g.: Saatchi and Saatchi,

McKinsey, and the US
department store, Nordstrom.
Customization
Customization means that companies have to be aware of
and responsive to customers differing requirements.
Mass customization can be defined as follows:
Key issues for CRM strategists considering
customization are these:

1. Do customers want customized products and

services?
2. What degree of customization is desired?
3. Will customers pay a premium for customization?
Value Through Marketing Mix
 Value from
products (and Value from Value from
services) service processes

Product service quality

innovation service
incremental guarantees the complaints
benefits service level management Value from people
product-service agreements process
bundling and service recovery
branding. programmes

Value from
customer
communication

Value from Disintermediation Value from

physical evidence Personalization channels
Interactivity
Service Quality
There are two major perspectives on service quality:
Quality is conformance to
specification.
The business specifies what
counts as quality, and measures
its performance to that standard.
conformance to specification
might mean producing error-free
invoices, delivering on time and
in full as promised to customers,
or acknowledging a customer
complaint within 24 hours.
Quality is fitness for
purpose.
In a services environment,
fitness for purpose might mean
offering savings plans that help
first-time home buyers, recruiting
customer contact staff who are
highly empathic and responsive,
or customizing service delivery
for customers.
 Service quality theories
Two service quality theories have dominated management practice as companies
try to improve their service performance: the Nordic model (by Christian
Grnroos) and the SERVQUAL model.
Service level agreements

A number of metrics are used to measure performance of the supplier and

compliance with SLA service standards. These may include:
Availability. The percentage of time that the service is available over
an agreed time period.
Usage. The number of service users that can be served
simultaneously.
Reliability. The percentage of time that the service is withdrawn or
fails in the time period.
Responsiveness. The speed with which a demand for service is
fulfilled. This can be measured using turn-around time or cycle-time.
User satisfaction. This can be measured at the time the service is
delivered or periodically throughout the agreed service period.
Service recovery programmes
The complaints management process
Value from customer communication
Three processes are responsible for the enhanced power
of communication to create value for customers:
1. Disintermediation
Disintermediation refers to the removal of intermediaries
such as broadcast and print media from the companys
communication channels with customers.
2. Personalization
3. Interactivity