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 Product Procure Make Price Sell Advertise/ Promote Distribute Service Fig b:- Value Creation & Delivery Sequence Choose the value Provide the value Customer Segmentation Market Selection / Focus Value Positio-ning Product Develop-ment Service develop-ment Pricing Sourcing Making Distributing Servicing Tactical Marketing Strategic Marketing Advertising Sales promotion Sales force 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 Activities Support Human Resource Management Margin Technology Development Procurement Inbound Logistics Outbound Logistics Margin Marketing And Sales Operations Service 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:- The Market-sensing process:- All the activities in gathering market intelligence, disseminating it within the organization, and acting on the information. The New-offering realization process:- All the activities in researching, developing, and launching new high-quality offerings quickly and within budget.

The Consumer acquisition process:- All the activities in defining target markets and prospecting for new customers. The Customer relationship management process:- All the activities in building deeper understanding, relationships, and offerings to individual customers. 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:- It is a source of competitive advantage in that it makes a significant contribution to perceived customer benefits. It has applications in a wide variety of markets. It is difficult for competitors to imitate.

Sometimes business realignment may be necessary to maximize core competencies. It has three steps:- (Re)defining the business concept or the ‘big idea’. (Re)shaping the business scope. (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 Customer Focus Competen-cies Core Collabora-tive Network Value Exploration Cognitive Space Competency Space Resource Space Value Creation Customer Benefits Business Domain Business Partners Value Delivery Customer Relationship Management Internal Resource Management Business Partner 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:- Value Exploration:- How can a company identify new value opportunities? Value Creation:- How can a company efficiently create more promising new value offering? 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.