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Management Development Institute, Gurgaon

Name of Programme: - PGPIM(2018-20)


Mid-term Examination, Term IV
Name of the Course……Customer Value Management
Name of the course Faculty: -Nishant Kumar
Section-Marketing
Nature of Exam: - Open Book

Date of Examination:14 July 2019 Time 3 Hrs.

Maximum Marks: -100 Weightage:-40%


Examiner’s instructions
 Your name and student registration number should be marked on the cover sheet.
 Please answer each question in the designated area on the answer sheet.
 The exam consists of 3 questions.
 The exam gives a maximum score of 100 points.
 You are allowed to use the course literature and other research articles mentioned by the
course teacher.
 Read through all the questions before you start answering.
 You must write answers in your own words. Please note, it is not acceptable to copy
and paste text from another source/website without proper referencing, or pass
another person’s idea as yours. If it is found, you will get FAIL in this course.
 If you do not want your exam to be graded, you must turn it in with "CANCEL" written
on the cover page.
 The results of the exam will be posted no later than two weeks after the exam submission
date.
 Final exam paper should be submitted to Ms. Deepti Choudhary, Graduate Programme
Office, Management Development Institute.

STUDENT NAME: Shashi Kant Shukla


REGISTRATION NO: 18PGPIM44

POINTS:

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Task 1: Discuss the impact of Service Dominant Logic on customer value perception and value
delivery. Can you identify and discuss any gap/limitation of the Service Dominant Logic (SDL)
presented by Vargo and Lusch (2004)? You can use the articles discussed in this course and other
sources (only research articles published in international journals) to develop and present your
arguments. Do you have any idea how this gap/limitation can be addressed? (35 points)

With time marketing thought has started shifting towards a new thought process, this line of
thought is different from the earlier which relied on the presumption that marketing necessarily
involved exchange of goods. The new system believes in the exchange of the intangibles or
perishable services.

This model of service dominant logic may be well suited to the current business scenario as the
customers are more well informed about the product before they take the buying decision.
Customers do not buy goods or services; they buy offerings which render services which create
value.

We shall be able to better understand the service dominant logic by first looking at the goods
centered view and then contrasting it with the service centered view.

The goods centered view may be summarized in the following points:


 Goods form the basic building blocks of all economic activity
 Goods are inputs that have been transformed into more valuable outputs by the means of a
transforming process. In this process significant value is added to the goods which must be
superior to the competitor’s offerings.
 In order to improve process productivity and control the goods must be standardized and
produced away from the point of sale
 Goods may be stacked or inventoried till the point of time they are demanded

The service centered view may be satted down in the following points:
 Organizations should focus on identifying and building their competitive advantage which
includes developing and harnessing their core competencies
 Identify the customers that can benefit from this core competence of yours and charge them a
premium for serving them
 The customer may be equally involved in developing the product as an employee of the
organization. This involves equal participation from the customer before, during and after the
production of the good/service that shall be consumed by the customer eventually
 Firm’s financial performance may be improved by gauging the marketplace feedback
continuously and working upon it in a concurrent manner

The Service Dominant Logic may be able to explain most of the aspects of the current business
scenario however it is difficult to adopt it as a fully functional model, because of the following
gap/limitations of the Logic.

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S. No. Aspect Limitation
1 Unit of Exchange It is comparatively very easy to measure economic activity
going by the goods centered logic. The economic transactions
undergone by the exchange of goods can easily be stated in
monetory terms which can be used to meaure the total
economic activity undergone in a region during a period of
time. It gets very difficult to measure economic activity going
by the service dominant logic. For example, it may be complex
to assess the economic value of activities like teaching or
consulting unless they are considered as commodities.
2 Variability in the It may be very complicated to determine the exact value of a
meaning of value service as the value may differ for each and every consumer
based upon their ”use value” of the product.
3 Perception based The service dominant logic leaves scope of doubt whereby the
customer is satted as an operant resource. Every customer has a
free will to perceive a different (time, use or exchange) value of
the service or product.
4 Role of customer The customer is a co-creator as per the service dominant logic,
this means that every process must have trhe flexibility to
encorporate the real times input of the customer. This may not
be possible in highly standardized products where the process
has been optimized to reduce costs. Thus the model does not
satnd well suited for organizations that aspire to be cost
competitive.
5 Visibility to the The customers are identified as an active participants in
customer relational exchange and co-production, however it may be a
overcut for strongly commoditized goods such as sugar or salt,
where the particiption of the cutomer as a co-creator is neither
required nor asked for. The customer may also not be willing to
participate in customizing such goods and would be happy with
the status-quo.

Source: Vargo, S.L. & Lusch, R.F. (2004), Evolving to a new dominant logic for Marketing.
Journal of Marketing, 68, 1-17

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Task 2: Building on theoretical understanding developed during this course, propose a
conceptual framework (model) for explaining value creation for economically underprivileged
consumers in India. Your framework should be well grounded in the literature and supported
with some illustrations. (35 points)

The following conceptual framework illustrates how value can be created for economically
underprivileged consumers in India. This framework is based on the learnings earned from the
repeated interactions with the rural consumers while working part-time in an NGO (Kartavya) in
India over a period of two years.

•helps realise performance •Provide features, functions &


and outcomes characteristics
•help consumers identify with •Provide sensory, emotional
the product & relational experience
•helps consumer evaluate •A means of self expression
aletrnative, making more
informed and faster
decisions
Informat
Products
ion

Interacti Environ
ons ment
•Service interactions and •attributes of the purchasing
responsiveness environment contribute to
•Service attributes such as functional value
staff politeness, friendliness •Features create sensory &
& empathy emotional experience
•Provide personal meaning to •Environment contributes to
customers the product's economic cost

One of the few examples that best illustrate the value creation for the economically
underprivileged consumers in India are:

 Narayana Hrudayalaya – NH (Narayana Hrudayalaya) have completely transformed the manner


in which the underprivileged in India were exposed to medical services. The medical services for
the underprivileged were initially limited to government hospitals in India where the level of
services delivered to the customers was sub-par to the private hospitals. NH focused on the
following source of value and thus succeeded in creating immense value for the rural consumer.
o Information – The consumers were made well aware of the cost of the procedures in
the Narayana Hrudayalaya facilities. One of the major deterrent for the rural consumers
was the high cost of procedures in private hospitals. This provided a level of
transparency to the consumers and helped them relate with the product, this resulted
in better word of mouth marketing for Narayana.

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o Products – The level of service received by the customers was well above par than the
government facilities, this enhanced the consumer’s self-concepts.
o Interactions – The staff was well trained, very polite and empathetic this enhanced the
experiential value of the interactions for the consumers. The customers started feeling
better about themselves as they had ben earlier used to sub-standard, rough treatment
at the government hospitals.
o Environment – The environmental condition at all NH facility were exceptional even for
private hospital standards. There were OPDs with seating arrangement for visitors,
canteen/cafeteria, well equipped stores; all these contributed to enrichment of the
environmental value of the Narayana Hrudayalaya facilities and made these people
from the weaker economic backgrounds feel better about visiting a hospital.

Source: J. Brock Smith and Mark Colgate: Customer Value Creation: A Practical Framework

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Task 3: In assignment no 2, you were asked to give your personal reflections on your previous
work experience/ experience as a consumer. Now you can theoretically examine your text, and
present a conceptual view on how value was created or it can be created. You are required to use
relevant literature for developing your arguments. (30 points)

I worked at Tata Motors for three years. During this time, I encountered multiple instances for
our direct and indirect customer. My direct customer was the Main assembly line which received
the finished Axles from my plant. The indirect customer was the end customer that received the
final assembled commercial vehicle from the plant of Tata Motors.
I would like to theoretically analyse the customer experience under the following heads:

• There was an issue faced by our direct customer where a


he had to work extra due to a process which was missed
The at our end. We identified the process asap and
relationship brainstormed along with the customer to come to a
feasible solution for the problem. This helped in
experience enhancing our relationship experience with the direct
cutomer.

• As a part of the World Class Quality initiative driven by


Tata Motors at the strategic level we had to keep track of
the problems faced by the end consumer due to our
services. We identified that a particular toe-in problem
was occuring beacuse of us thorugh customer's
feedback. This process was then automated by raising
budget and working towards improving customer value
thorugh the process of customer learning.
Customer • Our direct customer in terms of logistics and inventory
Learning management was the warehouse. Initially in order to
make up for the under utilised capacity our shop used to
produce more than required. This became a problem for
our customer to manage the inventory successfully.
Relaizing this Issue we worked on implementing
Heijunka or leveled production in our shop that
significantly lowered the inventory levels for our
consumer and helped him better serve their next
customer in the value chain.

Source: Adrian F. Payne. Kaj Storbacka. Pennie Frow: Managing the co-creation of value

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