1. Introduction
Lecture 1

2. Agenda Module Guide Assessment Customer Value
New marketing: marketing is dead, long live marketing!

3. Customer value

4. value-based pricing  
value chain
value-added
net present value
value-positioning
market value  
net book value
value migration  
value driver  
value engineering  
fair value
shareholder value  
best value   
Customer lifetime value

5. Chartered Institute of Marketing definition of marketing (2007)
The strategic business function that creates value by stimulating, facilitating and fulfilling customer demand.
It does this by building brands, nurturing innovation, developing relationships, creating good customer service and communicating benefits.
With a customer-centric view, marketing brings positive return on investment, satisfies shareholders and stakeholders from business and the community, and contributes to positive behavioural change and a sustainable business future.

6. Definition of marketing
Marketing is a customer focus that permeates organisational functions and processes and is geared towards marketing promises through value propositions, enabling the fulfilment of individual expectations created by such promises and fulfilling such expectations through support to customers’ value-generating processes, thereby supporting value creation in the firm’s as well as its customers’ and other stakeholders’ processes.
Source: Gronroos, C., 2006 On defining marketing: finding
a new roadmap for marketing, Marketing Theory, 6,

7. More definitions of marketing
Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others
Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return
Source: Kotler, P., Armstrong, G., Wong, V., Saunders, J., 2008,
Principles of Marketing. 5th european ed Harlow Prentice Hall

8. Importance of Customer value
Marketing - managerial process concerned with the facilitation and consumption of exchanges
Exchange - transaction between two parties in which each party give up something of value in return for something of greater value,
Consumer value plays a crucial role at the heart of all marketing activity (Holbrook, 1999 p. 1)
Source: Holbrook, M. B., 1999 Consumer Value
A framework for analysis and research. Abingdon: Routledge

9. Nature of consumer value
Holbrook definition
An interactive relativistic preference experience
Interactive - interaction between some subject (consumer/customer) and some object (product).
Relativistic – (a) comparative (involving preferences among objects) (b) personal (varying across people), (c) situational (specific to the context)
Preferential – embodies a preference judgement
Experience – resides in the consumption experience (s)
Source: Holbrook, M. B., 1999 Consumer Value
A framework for analysis and research. Abingdon: Routledge

10. Types of consumer value
Three key dimensions
Extrinsic vs intrinsic value
Self-orientated vs other-orientated value
Active vs reactive value

11. Typology of Consumer Value
Extrinsic
Intrinsic
Active
Efficiency
Play
Self-orientated
Excellence
Aesthetics
Reactive
Status
Ethics
Other-orientated
Active
Esteem
Spirituality
Reactive
Source: Holbrook, M. B., 1999 Consumer Value
A framework for analysis and research. Abingdon: Routledge

12. Customer perceived value definition
… perceived value is the consumer's overall assessment of the utility of a product based on perceptions of what is received and what is given. Though what is received varies across consumers (i.e., some may want volume, others high quality, still others convenience) and what is given varies (i.e., some are concerned only with money expended, others with time and effort), value represents a trade-off of the salient give and get components.
Source: Zeithaml, V. A., 1998 Consumer Perceptions of Price, Quality, and Value:
A Means-End Model and Synthesis of Evidence Journal of Marketing 52 (July): 2-22

13. Customer perceived value
Perceived Benefits
Customer –perceived value = ______________
Perceived Sacrifice
Benefits = attributes of core product/service and supporting services, perceived quality and price
Sacrifice = customer costs involved in purchasing, such as time, travel, repairing faulty work, etc. – NOT just price
Source:Monroe, K. B., 1991 Pricing – Making Profitable Decisions, McGraw-Hill, New York, NY. Quoted in Ravald, A.
and Gronroos, C., The value concept and relationship marketing European Journal of Marketing Vol 30 No p

14. Customer perceived value in relationships
Episode benefits + relationship benefits
Total episode value =
Episode sacrifices + relationship sacrifice
poor episode value can be balanced by a positive perception of the relationship as a whole
management of any firm should note that the episode value and the relationship value exist in a mutually dependent relationship
Ravald, A. and Gronroos, C., The value concept and relationship marketing
European Journal of Marketing Vol 30 No p

15. Value
Customer value is a customer’s perceived preference for and evaluation of those product attributes, attribute performances, and consequences arising from use that facilitate (or block) achieving the customer’s goals and purposes in use situations.
Source: Woodruff, R. B., 1997 Customer Value: The Next Source for Competitive Advantage
Journal of the Academy of Marketing Science Vol 25 No. 2, pages

16. Customer Value Hierarchy Model
Source: Woodruff, R. B., 1997
Desired Customer Value
Customer Satisfaction with Received Value
Customers’ goals and purposes
Goal-based satisfaction
Desired consequences in use situations
Consequence-based satisfaction
Attribute-based satisfaction
Customers’ goals and purposes

17. New marketing: marketing is dead, long live marketing!

18. Agenda The process of going to market What managers need to know
Challenges for the 21st century manager
The strategic pathway
A route-map for market-led strategic change

19. The process of going to market
Creativity
Innovation
Reinvention
Processes that define value
e.g., market knowledge and
learning, CRM, research, intelligence
Customer
value
Processes that create value
e.g., new product development, innovation,
brand development, strategic relationships
Processes that deliver value
e.g., channels, supply chain,
customer service
Resources
Capabilities
Strategic relationships

20. What managers need to know
The process of going to market, not “marketing” in the traditional sense:
understanding customers and superior value
building marketing strategy to deliver a robust value proposition to customers
achieving implementation by driving the things that matter through the corporate environment

21. 21st Century challenges The process of going to market New business
models
Business
agility
Crisis
survival
Global
recession
Innovation
Siege
The process of going to market
Aggressive
investment
Globalization
Virtuality
Paradox
CSR
Strategy

22. The strategic pathway Strategic thinking and thinking strategically
Market
sensing
and
learning
strategy
Strategic
market
choices
and
targets
Customer
value
strategy
and
positioning
Strategic
relationships
and
networks
Strategic
transformation
and strategy
implementation

23. A route-map for market-led strategic change
Part I
Customer value
imperatives
Part II
Developing a value-based
marketing strategy
Part III
Processes for managing
strategic transformation
The strategic pathway
Change strategy
Market sensing
and learning
strategy
The Customer
is always
right-handed
Strategic
gaps
Strategic
market choices
and targets
Strategic
thinking and
thinking
strategically
New marketing
meets
old marketing
Organization
and processes
for change
Customer value
strategy and
positioning
Implementation
process and
internal
marketing
Value-based
marketing
strategy
Strategic
relationships
and networks