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MARKETING MANAGEMENT
2014-2015 SEMESTER 2
LECTURE 1
CUSTOMER VALUE
Mr. Michael Chance
2 Agenda
• Housekeeping (Module information)
• Program Takeaways
• Definitions of Marketing
• Customer Value Models (for assignment)
• Value Proposition
 File Sharing
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 Module Guide
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 The Module Guide is available on the CD/DVD

distributed by the school, and is available on our
Basecamp group.
 Textbook
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 Piercy, Nigel F., Market-Led Strategic Change

 4th edition - 2009
 Available for inexpensive
download on Scribd.com
 Assessment Method
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 You will write a 3,000 word assignment with five (5)

criteria.
 The first criteria will be written separately and is
due on Wednesday, October 21st.
 The complete assignment, including the first criteria,
is due at the end of the semester (Monday,
December 14th).
 Program Takeaway #1
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 Program Takeaway #2
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 Program Takeaway #3
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10 Definitions of Marketing
11 Definitions of Marketing
Marketing is the human activity directed at
satisfying human needs and wants through an
exchange process.
-Philip Kotler (1980)
12 Definitions of Marketing
Marketing is the activity, set of institutions, and
processes for creating, communicating, delivering,
and exchanging offerings that have value for
customers, clients, partners, and society at large.

-American Marketing Association (July 2013)

13 Definitions of Marketing
Marketing is the management process
responsible for identifying, anticipating and
satisfying customer requirements profitably.
-Chartered Institute of Marketing (2015)
 Frequency of use
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Source: Google.com, accessed January 2015

15 Customer Perceived Value Models
• Piercy
• Holbrook
• Monroe
• Ravald and Gronroos
• Woodruff
• Kotler and Keller
• Fawcett
 Piercy’s Model
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Creativity
Innovation
Reinvention

Processes that define value

e.g., market knowledge and
learning, CRM, research, intelligence

Processes that create value Customer

e.g., new product development, innovation, value
brand development, strategic relationships

Processes that deliver value

e.g., channels, supply chain,
customer service

Resources
Capabilities
Strategic relationships
Source: Piercy, N.F., Market-Led Strategic Change 4th ed., 2009
 Holbrook’s Model
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Extrinsic Intrinsic

Self-orientated Active Efficiency Play

(O/I ratio) (Fun and Leisure)
Excellence Aesthetics
Reactive
(Quality) (Beauty)

Status Ethics
Other-orientated Active (impression) (Justice, Virtue and
Morality)
Reactive Esteem Spirituality
(Possessions) (Sacredness)

Source: Holbrook, M. B., 1999 Consumer Value

A framework for analysis and research. Abingdon: Routledge
 Monroe’s Model
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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 2 1996 p 19 - 30
 Ravald and Gronroos’ Model
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Episode benefits + relationship benefits

Total customer value =
Episode sacrifices + relationship sacrifices

 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

Source: Ravald, A. and Gronroos, C., The value concept and relationship marketing
European Journal of Marketing Vol 30 No 2 1996 p 19 - 30
 Kotler & Keller’s Model
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 Woodruff’s Model
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Goal-based satisfaction
Customer’s goals and purposes

Consequence-based satisfaction
Desired consequences in use

Attribute-based satisfaction
Desired product attributes and attributes’ performance

Source: Woodruff, R. B. (1997). Customer Value: The next source for competitive
advantage, Journal of the Academy of Marketing Science 25(2): 142
 Fawcett’s Model
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Innovation

Responsive-ness Delivery
Customer
Value

Cost Quality

Source: S. E. Fawcett, A. M. Fawcett (2014) Definitive Guide to Order Fulfillment and Customer Service, The, Pearson FT Press
23 Value Proposition
• Definitions
• Examples
• Assignment Hints
 Value Proposition Definitions
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 “a clear, simple statement of the benefits, both tangible

and intangible, that the company will provide, along
with the approximate price it will charge each customer
segment for those benefits.”
- “A business is a value delivery system” (1988), Lanning and Michaels

 “the set of benefits or values [that a brand] promises to

deliver to consumers to satisfy their needs”
- Principles of Marketing 15th Ed. (2012), Philip Kotler and Gary Armstrong
 Value Proposition Definitions
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 Your value proposition speaks to the heart of your

competitive advantage, and should power the
messaging you're putting out on every marketing
channel. It should clearly state why someone would
make a purchase from your company, among the many
others out there that appear to do similar things.
- 6 Parts of Your Marketing You Should Always Be Optimizing (2013), Meghan
Lockwood, Hubspot.com (accessed Jan. 2015)
 Value Proposition Definitions
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 A value proposition is a promise of value to be

delivered. It’s the primary reason a prospect should buy
from you.
 In a nutshell, value proposition is a clear statement that
explains how your product solves customers’ problems
or improves their situation, delivers specific benefits, tells
the ideal customer why they should buy from you and
not from the competition (unique differentiation).
 - Useful Value Proposition Examples (and How to Create a Good One) (2012),
Peep Laja, conversionxl.com (accessed Jan. 2015)
 The Value Proposition Is NOT
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 A marketing tagline:

 A mission statement or a positioning statement:

 The Value Proposition Contains
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 Headline. What is the end-benefit you’re offering, in 1

short sentence. Can mention the product and/or the
customer. Attention grabber.
 Sub-headline or a 2-3 sentence paragraph. A specific
explanation of what you do/offer, for whom and why is
it useful.
 3 bullet points. List the key benefits or features.
 Visual. Images communicate much faster than words.
Show the product, the hero shot or an image reinforcing
your main message.
 The Value Proposition Explains
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 What product or service is your company selling?

 What is the end-benefit of using it?
 Who is your target customer for this product or service?
 What makes your offering unique and different?
 Value Proposition Example
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Source: meetingburner.com (accessed Jan. 2015)

 Value Proposition Example
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Source: shopify.com.sg (accessed Jan. 2015)

 Value Proposition Example
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Source: shopify.com.sg (accessed Jan. 2015)

33 Assignment Hints
 Assignment Hints
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 Don’t use a well-run company for your assignment.

 You won’t be able to improve the Value Proposition.

 Assignment Hints
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 Don’t use a startup with an awesome landing page

for your assignment.

 You won’t be able to improve the Value Proposition.

 Assignment Hints
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 DO talk about a business that is in trouble.

 It is much easier to improve the Value Proposition.

 Assignment Hints
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 It can be a business that is not famous.

 You just have to describe it well.

 Assignment Hints
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 How to choose a competitor

 The competitor should be better than your company
39 Helpful Articles
• bit.ly/1jML7sv
• bit.ly/15dDb29
40 Discussion Questions
 Discussion Questions
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 What consumer wants are met by the following

products or services:
 Singapore Airline’s maiden flights on A380 between
Singapore and Sydney
 Acer Aspire notebook
 Yeo’s soya bean drink
 Pat’s Schoolhouse

 Give an example of a substitute for each product.

 Discussion Questions
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 Describe the target market segment for the OSIM

uPhoria Warm leg massager.
 What actions involving the
four marketing mix elements
might be used to reach this
target market?
 Good Job Today!
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