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					Marketing Management Module-1
Lesson#4 Marketing and Customer value

Marketing & Customer Value
The task of any business is to deliver customer value at a profit while being socially responsible.

In the hypercompetitive economy with increasingly rational buyers faced with abundant choices, a company can win only by fine-tuning the value delivery process and choosing, providing, and communicating superior value.

Traditional Physical Process Sequence
Make the Product
Design product Procure Make Price

Sell the Product
Sell Advertise/ DistriPromote Bute Service

The traditional view of marketing is making and selling something. Here, marketing takes place in the selling process. This process can succeed in underdeveloped economies marked by goods shortages where consumers are not fussy about quality, features or style. This view will not succeed in markets where customer is faced with multiple choices.

Choose the value
Custo Market Value mer Selectio positi Segme n/focus oning ntation Strategic Marketing
Pro duct Dev elop

Provide the value
Service develop ment

Communicate value
Distri buting Servic ing

Pric ing

Sour cing Maki ng

Sales force

Sales Adverti promo sing tion

Tactical Marketing

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The value creation and delivery sequence is put in three phases – chosing the value – providing the value and communicating the value. The first phase choosing the value, represents the ‘homework’ marketing must do before any product exists. The marketing staff must segment the market, select the appropriate market target, and develop the offering’s value positioning. The formula STP – segmentation, targeting, positioning, is the essence of strategic marketing. Having chosen the value, the second phase is providing the value. Marketing must define specific product features, prices and distribution. The task in the third phase is communicating the value by utilizing the sales force, sales promotion, advertising, and other communication tools to announce and promote the product. Each phase has its cost implications. The value delivery process begins before there is a product and continues while it is being developed and after it becomes available.

Value Approach to Marketing The 3 Vs
– define the value segment or customers (and their needs) – value defining process.market research and company self-analysis. – Define the value proposition – value developing process.- new product development, sourcing strategy, and vendor selection, and – Define the value network that will deliver the promised service. – value-delivering process. – advertising and managing distribution.

The Value Chain: Michael Porter
• Value chain identifies five primary and four support activities that create value and cost in any business.
Firm Infrastructure Human Resource Management Technology Development

Procurement
Inbound Outbound Marketing Logistics Operations logistics & Sales Service

• The primary activities are inbound logistics or bringing materials into the business, operations or converting them into final products; outbound logistics or shipping out final products, marketing them, which include sales, and servicing them. • The support activities-procurement, technology development, human resource management, and firm infrastructure (general management, planning, finance, accounting, legal, and government affairs) are handled in specialized departments.

• The firm’s task is to examine its costs and performance in each value-creating activity keeping competitors’ costs and performance as benchmarks. They should also study the best in the class practices and try to match or improve upon them.
• The firm’s success will depend upon how well the company coordinates departmental activities to conduct the core business processes that include market sensing, new-offering realization, customer acquisition, CRM, and fulfillment management. The firm also needs to look for competitive advantages beyond its own operations into the value chain of suppliers, distributors and customers. Many companies have p[partnered with specific suppliers and distributors to create superior value delivery network(supply chain).

Core competency:
A core competency has three distinct characteristics: (1) it is a source of competitive advantage that makes significant contribution to perceived customer benefits. (2) It has applications in a wide variety of markets. (3) It is difficult for competitors to imitate. NIKE – core competency is shoe design and merchandising – it concentrates on this core competencies, and outsources manufacturing to Asian countries who are more competent in this task.

Holistic Marketing orientation and Customer value:
Holistic marketing orientation means integrating the value exploration, value creation and value delivery activities, with the purpose of building long-term, mutually satisfying relationships and co-prosperity among key stakeholders. Holistic marketers succeed by achieving profitable growth by managing superior value chain that delivers high quality, service and speed, expanding customer share, building customer loyalty and capturing customer life-time value.