Objectives

Define

value & satisfaction - understand

how to deliver them
The nature of high-performance
businesses
How to attract & retain customers
Improving customer profitability
Total quality management
2000 Prentice Hall

Determinants of Customer
Delivered Value
Image
Image value
value
Personnel
Personnel value
value
Services
Services value
value

Total
Total
customer
customer
value
value

Product
Product value
value

Customer
Customer
delivered
delivered
value
value

Monetary
Monetary cost
cost
Time
Time cost
cost
Energy
Energy cost
cost

Psychic
Psychic cost
cost
2000 Prentice Hall

Total
Total
customer
customer
cost
cost

Satisfaction is a persons
feelings of pleasure or
disappointment resulting
from comparing a products
perceived performance (or
outcome) in relation to his or
her expectations.
2000 Prentice Hall

High Performance Business

Set strategies to
satisfy key...
By improving
critical business...
and
aligning...
2000 Prentice Hall

Stakeholders
Processes

Resources

Organization

The Generic Value Chain

2000 Prentice Hall

MarketServing
ice
and
sales

Primary Activities

OutInbound Operabound
Logistics tions
Logistics

rgi

Procurement

n
rgi

Technology Development

Ma

Human resource management

Ma

Support
Activities

Firm infrastructure

Levi Strauss
Value-Delivery Network
Order
Du
Du Pont
Pont
(Fibers)
(Fibers)

Order

Milliken
Milliken
(Fabric)
(Fabric)

Delivery

Order

Levis
Levis
(Apparel)
(Apparel)

Delivery

Order
Sears
Sears
(Retail)
(Retail)

Delivery

Customer
Customer

Delivery

Competition is between networks, not companies.

The winner is the company with the better network.
2000 Prentice Hall

Satisfied Customers:
Are

loyal longer
Buy more (new products & upgrades)
Spread favorable word-of-mouth
Are more brand loyal (less price
sensitive)
Offer feedback
Reduce transaction costs
2000 Prentice Hall

Levels of Relationship
Marketing
High
margin

Medium
margin

Low
margin

Many
customers/
distributors

Accountable

Reactive

Basic or
reactive

Medium
number of
customers/
distributors

Proactive

Accountable

Reactive

Few
customers/
distributors

Partnership

Proactive

Accountable

2000 Prentice Hall

Customer Development
Suspects

First-time

Prospects customers

Disqualified
prospects

2000 Prentice Hall

Repeat
customers

Clients

Inactive or
ex-customers

Advocates Partners

Customer/Product
Profitability Analysis
Customers
C1

P
r
o
d
u
c
t
s
2000 Prentice Hall

P1
P2
P3
P4

+
+
+

High
profit
customer

C2

C3

Mixed-bag
customer

Losing
customer

Highly
profitable
product
Profitable
product
Losing
product
Mixed-bag
product

The Profit Triangle

at
ion

Va
lu

er

ec

op

re

l
na

at
io

er

Int

Profit
Profit

2000 Prentice Hall

Competitive advantage

Quality

#1

2000 Prentice Hall

Quality

is the
totality of features
and characteristics
of a product or
service that bear on
its ability to satisfy
stated or implied
needs.

Review
Define

value & satisfaction - understand

how to deliver them
The nature of high-performance
businesses
How to attract & retain customers
Improving customer profitability
Total quality management
2000 Prentice Hall