Marketing & Customer Value:- Marketing involves satisfying

customers’ needs and wants at a profit while being socially

responsible. In a 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.

 The Value Delivery Process:- The traditional view of marketing is

that the firm makes something and then sells it; however this
traditional view of the business process will not work in economies
where people face abundant choices. Here the ‘mass market is
actually splintering into numerous micro-markets, each with its own
wants, perceptions, preferences and buying criteria. This realization
has put the Marketing at the beginning of the planning. Instead
of emphasizing making and selling, companies now see themselves
as part of a value delivery process.
 Fig a:- Traditional Physical Process Sequence

Make the product Sell the product

Design Advertise/
Product Procure Make Price Sell Distribute Service
Promote

Fig b:- Value Creation & Delivery Sequence

Choose the value Provide the value

Market Value Product Service Sourcing Distributing

Customer
Selection Positio Develop develop Pricing
Segmentation
/ Focus -ning -ment -ment Making Servicing

Tactical Marketing
Strategic Marketing
Sales
Advertising Sales force
promotion

Communicate the value

 The first phase, Choosing the value, represents the ‘homework’
marketing must do before any product exists. The formula STP is the
essence of strategic marketing.
The second phase, is Providing the value. Marketing must
determine 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 of these value phases has cost implications and this value
delivery process begins before there is a product and continues while
it is being developed and after it becomes available.

 The Value Chain:- Michel Porter of Harvard has proposed the Value
chain as a tool for identifying ways to create more customer value.
According to this model, every firm is a synthesis of activities
performed to design, produce, market, deliver, and support its
product. The value chain identifies nine strategically relevant
activities – five primary and four support activities – that create value
and cost in a specific business.
 Fig:- The Generic Value Chain

Firm Infrastructure

Margin
Activities

Human Resource Management

Support

Technology Development

Procurement

Margin
Inbound Outbound Marketing
Operations Service
Logistics Logistics And Sales

Primary Activities
 The firm’s task is to examine its costs and performance in each
value-creating activity and to look for ways to improve it. Managers
should estimate their competitors’ costs and performances as
benchmarks against which to compare their own costs and
performance.
The firm’s success not only depends on how well each
department performs its work, but also on how well the company
coordinates departmental activities to conduct core business
processes. These include:-

1. The Market-sensing process:- All the activities in gathering market

intelligence, disseminating it within the organization, and acting on
the information.

2. The New-offering realization process:- All the activities in

researching, developing, and launching new high-quality offerings
quickly and within budget.
3. The Consumer acquisition process:- All the activities in defining target
markets and prospecting for new customers.

4. The Customer relationship management process:- All the activities in

building deeper understanding, relationships, and offerings to individual
customers.

5. The Fulfillment management process:- All the activities in receiving and

approving orders, shipping the goods on time, and collecting payment.

Strong companies are reengineering their work flows and building

cross-functional teams to be responsible for each process. Ex:- At Xerox, a
Customer Operations Group links sales, shipping, installation, service
and billing so these activities flow smoothly into one another.

To be successful, a firm also needs to look for competitive advantages

beyond its own operations, into the value chain of suppliers, distributors,
and customers. Many companies today have partnered with specific
suppliers and distributors to create a superior Value delivery network, also
called Supply chain.
 Core Competencies:- Traditionally, companies owned and
controlled most of the resources that entered their businesses –
labour, materials, machines, information etc. – but this situation is
changing. Many companies today outsource less-critical resources if
they can obtain better quality or lower cost.
The key, is to own and nurture the resources and competencies
that make up the essence of the business. Ex:- Nike does not
manufacture its own shoes, because certain Asian manufacturers are
more competent in this task; instead Nike nurtures its superiority in
shoe design and merchandising, its two core competencies.

A Core competency has three characteristics:-

1. It is a source of competitive advantage in that it makes a significant

contribution to perceived customer benefits.
2. It has applications in a wide variety of markets.
3. It is difficult for competitors to imitate.
Sometimes business realignment may be necessary to maximize core
competencies. It has three steps:-
1. (Re)defining the business concept or the ‘big idea’.
2. (Re)shaping the business scope.
3. (Re)positioning the company’s brand identity.

Ex:- Kodak.

 A Holistic Marketing Orientation and Customer Value:- A

holistic marketing orientation can also help capture customer value.
The view of holistic marketing is to ‘integrate 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 achieve profitable growth by expanding customer
share, building customer loyalty, and capturing customer lifetime
value.
 Fig:- A Holistic Marketing Framework

Collabora
Competen

Network
Customer

-tive
Focus

Core

-cies
Value
Cognitive Competency Resource
Exploration Space Space Space

Value Customer Business Business

Creation Benefits Domain Partners

Value Customer Internal Business

Delivery Relationship Resource Partner
Management Management Management
 The Holistic marketing framework, shows how the interaction
between relevant factors and value-based activities helps to create,
maintaining, and renew customer value.
The holistic marketing framework is designed to address three
key management questions:-

1. Value Exploration:- How can a company identify new value

opportunities?

2. Value Creation:- How can a company efficiently create more

promising new value offering?

3. Value Delivery:- How can a company use its capabilities and

infrastructure to deliver the new value offerings more efficiently?
 The Central Role of Strategic Planning:- Successful marketing
thus requires companies to have capabilities such as understanding
customer value, creating customer value, delivering customer
value, capturing customer value, and sustaining customer
value. Only a select group of companies stand out as master
marketers. Ex:- P&G, Southwest Airlines, Nike, Wal-Mart, Nokia,
Sony, Samsung, LG, Infosys, Tata Steel, Dilmah group to name a few.
Intel describes how to created customer value and built a brand in a
category for which most people thought branding to be impossible.

 These companies focus on the customer and are organized to

respond effectively to changing customer needs. They all have well-
staffed marketing departments, and all their other departments
accept the concept that the customer is king.
 To ensure that they select and execute the right activities, marketers
must give priority to strategic planning in three key areas:-
managing a company’s businesses as an investment portfolio,
assessing each business’s strength by considering the market’s
growth rate and the company’s position and fit in that market,
and establishing a strategy. For each business, the company must
develop a game plan for achieving its long-run objectives.