Market Values

Market Values Customers Seek

.
A narrow vision wherein a firm views itself
in limited, product- or service-centered
ways--as makers and sellers of products
and services they produce and sell.

Marketing Myopia
The benefits (tangible or intangible) a
customer receives from a product or
service.

Market Values
 Product or
service
capabilities

Market
Customer value
needs and
wants

Market Value: The Convergence of

Capabilities with Wants or Needs
Universal Values

Product or service benefits that satisfy

the needs of the customer.
Personal Values

Product or service benefits that satisfy

the wants of the customer.
 CUSTOMER ROLES
USER PAYER BUYER
UNIVERSAL VALUES Performance value Price value Service value
PERSONAL VALUES
Social value Credit value Convenience value
Matrix of Emotional
Values and Customer
Group-specific
Individual-specific value Financing value Personalization value
Rules
The quality of physical outcome of using a
product or service.

Performance Value
The benefit of a product or service directed
at satisfying a person’s want for gaining
social approval or admiration.

Social Value
The enjoyment and emotional satisfaction
users obtain from products and services.

Emotional Value
The use of a product or service in which the
process of use itself offers value.

Experiential Consumption
A fair price and other financial costs
incurred in acquiring the product.

Price Value
Freedom from having to exchange cash at
the time of purchase or from becoming
liable for immediate payment.

Credit Value
Offering terms of payment more affordable
by distributing the liability over an extended
period of time.

Financing Value
The assistance customers seek in buying a
product or service.

Service Value
Saving in time and effort needed to acquire
the product.

Convenience Value
Receiving the product or service in a
manner tailor-made to an individual
customer’s circumstances.

Customization
 Customer Values are:

Instrumental
Dynamic
Hierarchical
Increasingly diverse at higher levels
Synergistic
Role Specific
Variable across customers

Figure 3.4
Characteristics of Customer Values
 User Individual
Specific

Payer Group Specific

Buyer Universal

The Hierarchical Order of Values

USER VALUES PERFORMANCE SOCIAL EMOTIONAL
•Quality Improvement •Price exclusivity •Emotional
•Innovations •Limited availability communications
•Mass customization •Social image ads
•Warranties and guarantees •Exclusive offerings

PAYER VALUES PRICE CREDIT FINANCING

•Low price from lower margins •Acceptance of credit •Leasing
•Low price from increased productivity cards •Customized financing
(achieved through economies of scale, •Offering of own credit
modernized plant, automation, business card
process reengineering) •Deferred payment

BUYER VALUES SERVICE CONVENIENCE PERSONALIZATION

•Product display and demonstration •Convenient point-of- •Personal attention and
•Knowledgeable salesperson access courtesy

Tools for Creating Market Values

•Responsiveness •Automated transaction
•User support and maintenance service recording
 CUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVE
PART 4: Building Loyalty and Customer Value

 Creating Market Values for the Customer

 Value delivery has two dimensions:
◦ Effectiveness
◦ Efficiency

Value Delivery
Dimensions of Value Delivery

Efficiency
(Resource conservation)
POOR GOOD

GOOD Effectiveness Best Value

Effectiveness
(Need/Want Fulfillment)
Efficiency
POOR Poor Value
Value
Tools for Creating Customer
Value
User Values Performance Social Emotional
• Quality improvement • Price exclusivity • Emotional
• Innovations • Limited availability communications
• Mass customization • Social image ads
• Warranties and guarantees • Exclusive offerings

Payer Values Price Credit Financing

• Low price from lower margins • Acceptance of credit • Leasing
• Low price from increased cards • Customized financing
productivity (achieved through • Offering of own credit
economies of scale, card
modernized plant, automation, • Deferred payment
business process re-
engineering)

Buyer Values Service Convenience Personalization

• Product display and • Convenient point-of- • Personal attention
demonstration access and courtesy
• Knowledgeable salesperson • Automated • Interpersonal
• Responsiveness transaction recording relationships
• User support and
maintenance service
Creating Market Values
for Users
The user is primarily concerned that
the product or service performs as
desired and that its use delivers social
and emotional benefits
 Quality improvement
 Product innovations
 Mass customization
 Warranties and guarantees

Performance Value
 15

Percent sales from new products

10

0
0.01 0.07 1.6 3.3
R&D spending as a percent of revenue

R & D Leads to More Sales from

New Products
 6

Change in market share (% per year)

4

0
0.01 4 12
Percent sales from new products

New Product Activity Leads to

Gains in Market Share
 Prestige pricing
 Limited availability
 Social-image-based marketing
communications
 New exclusive offerings
 Emotional advertising

Social and Emotional Values

Creating Market Values
for Payers
The types of value most important to
payers involve low-cost and ease of
making payments
 To reduce price, companies can opt for
two approaches:
◦ Accept lower margins
◦ Reduce their own costs of production by
improving productivity

Price Value
 The lower-margin approach consists of
selling at a low-profit margin to attract
customers
◦ Strategic insight

Low Price from Lower Margins

 Economies of scale
 Modernized plant
 Automation
 Business process reengineering

Low Price from Increased

Productivity
 Sellers may accept credit cards issued by
third parties or banks
 Sellers may issue their own credit cards or
give credit by other instruments
 Sellers may allow a delayed or deferred
payment

Credit And Financing Values

Creating Market Values
for Buyers
In general, buyers are looking for good service
before and after they make their selections
In addition, they want their purchases to be
convenient, not too time-consuming, and in a time
and place that fits their schedule
 The service value is created by the
distribution system
◦ Pre-purchase phase
◦ Post-purchase phase

Service Value
 Marketers can offer this value by:
◦ Having the product on display or ready for
demonstration and/or for trial use
◦ Hiring knowledgeable and responsive
salespersons who can answer customer
questions

Service in the Pre-purchase Phase

 Service in the post-purchase phase refers
to all the assistance a marketer can
provide to maintain the product use-ready
◦ Product-use advice and support
◦ Product maintenance

Service in the Post-purchase

Phase
 Convenient points of access
 Automated transaction recording
 Interpersonal relationships

Convenience Value and

Personalization Value
 Find out what customers want
 Organize to deliver those values
 Measure how well, in customer
perceptions, those values have been
delivered

Measuring Value Delivery

 1. What do target customers
value?

2. Of all the value dimensions

that target customers want,
which are most important?

3. How well (poorly) are we

5. What are target customers
doing in delivering the value
likely to value in the future?
that target customers want?

4. Why are we doing poorly

(well) on important value
dimension?

A Process for Determining

Customer Value
 Please rate the following statements on a 0-10 scale where 0 means you
disagree entirely, and 10 means you agree wholeheartedly.
• The firm understands my needs and preferences well.
• I can trust the firm not to take advantage of me as a customer.
• The firm values and shows its appreciation for my business.
• The firm takes specific actions to keep me as a customer.
• I can identify myself with the firm’s products and its actions.
• The firm can count on me as its supporter.
• I enjoy dealing with the employees of this firm.
• I love this firm’s products.
• I love to do business with this firm.
• I expect to continue my relationship with this firm for a long time.

Assessment of the Customer’s

Final Judgment