Marketing , Customer values and the Interrelationship Between them

- The third form of customer value is expressive value (Smith and Colgate, 2007); the personal or larger social meaning that the product holds with the customer

How is marketing defined? What is its importance in a company’s success? This paper will discuss and explain different definitions of marketing along with a definition of author himself. In addition, this paper will elucidate the importance of marketing by giving three examples where marketing was adapted with few mistakes resulting in disaster.

Then the report describes the theoretical aspects of the study in the literature review. This section mainly consists of brief description about different important topics about customer value marketing.

Zeithaml (1988, as cited in Smith & Colgate, 2007, p. 8) defined customer value as

Striving to be accurate and honest with customers in quoting estimated cost and estimated time for repairing completion

Marketing principles made a fast swift from the conventional methods to the modern marketing. From the literature, we can marked the shift from product centric view to customer centric view .i.e. from” inside-out to outside-in”. This made an outstanding shift from Mc Carty’s 4p concept to value based marketing. Emphasising this shift the Piercy(2009)imprint that marketing is a set of management activities that define ,create and deliver value to the customers.

Marketing is a management function which involves creating, communicating and delivering value for an organisation’s customers (Kotler, Brown, Burton, Deans & Armstrong (2010). Although many earlier academics define marketing as merely a process of satisfying customer needs in order to gain profits, more recent developments of the definition include its inherent connection with delivering superior value to customers in order to maintain ongoing relationships (Webster, 1992).

Functional and instrumental value refers to the buyer purchasing the product and having it complete the function it is designed to do (Smith & Colgate, 2007). More so concerned with the

* Value Pricing - Our product offers a variety of benefits that gives our product high value in consumer’s eyes. Consumers would be hard pressed to find a natural product with the same number of benefits.

Functional value is determined by the product itself, whether it meet the customer needs and wants and the usefulness of the products (how long the product can sustain). Customer can be affected by the functional value of the product that they prefer such as the function of the products, physical appearance, price and quality (Sheth et al., 1991). However, (Sweeney & Soutar, 2001) claim that functional value should divide into two dimensions which is price or value of money and quality or performance and should measure separately.

In the past, the concept of consumer perception on value has been utilized to analyze the decision making of consumers in many phases. The consumers will significance the product from many internal and external factors comparing with what he has to sacrifice. If the perceived value of the product exceeds what he has to give up, then he will choose to buy the product.

Customer value is everything to a business. It is the center and the cornerstone of a business. Moreover, the business should live to generate value to its customer base. The school of thought is that the customer value is only bringing revenue to a business. Hence, a customer value to a business is defined by how much money that customer spends in the business. It is not an argument that this view is perceived like that across the aisle. With that being said, customers and businesses feel the same way at some point.

Value: Value is defined as the total amount of money or revenue that the buyers are willing to pay

Customer Lifetime Value is a metric used in marketing that represents the total net profit a company will gain from any given customer (Rouse, 2016). A company can describe a profitable customer as “a person, household, or company whose revenues over time exceed, by an acceptable amount, the company costs of attracting, selling, and servicing that customer” (Berger & Nasr, 1998). The customer’s revenue that is excess is considered to be the customer lifetime value (Berger & Nasr, 1998).

Another perspective of value was theorized by Bowersox, Closs, and Cooper (2006), which they coined as economic value. Economic value builds on economy of scale in operations as the source of efficiency (p. 254). Further, Bowersox et al. perceived that “Economy of scale seeks to fully utilize fixed assets to achieve the lowest, total landed cost” (p. 254). Likewise, economic value operates to create efficiency of product/service, and the end-result is economic value at a high quality and low price to customers (Bowersox, 2006, p. 254).