CUSTOMER VALUE 2 Table of Contents Introduction......................................................................................................................................3 Literature Review............................................................................................................................3 Critical Reflection............................................................................................................................6 References........................................................................................................................................8
CUSTOMER VALUE 3 Introduction Customer Value is defined as the incremental benefit which is derived by a customer through purchasing a product. The value can be expressed as the difference between the total of tangible and intangible benefits and the cost of the product. There are three factors, price, quality and service, which influence the value of a product (Zhang et al., 2017). As the quality and service of a product increases, its value also increases. On the contrary, when the price of the product increases without any change in the benefits, the value of a product decreases. The customer value is categorized into two types-- the desired value and the perceived value. The desired value indicates the value expected by a customer. On the contrary, the perceived value indicates the value of a product expected by the customer after considering the cost. The perceived value is highly dependent on the tangible benefits received by the customer on payment of the cost. The actual value or the tangible benefits of a product can be realized after consumption of the product. When the product provides actual value which is higher than the perceived value, the customer value becomes very high. On the contrary, when the actual value is lower than the perceived value, the customer value decreases. Literature Review Quality— The concept of customer value indicates that the value of a product depends upon performance. When purchasing an item, a customer expects some attribute for it. When the attributes are found in the product, the customer derives value based satisfaction. Enhancing quality of the products enhances the chance of having the desired attributes as well (Kumar and Reinartz, 2016). From
CUSTOMER VALUE 4 this perspective, quality of the product plays a key role in enhancing the customer value. Quality of the products also ensures that the product would perform in a desired manner in several consequences. It increases the chance of attaining consequence-based satisfaction among the customers. Higher customer satisfaction indicates that higher value is being received from the product (Wu and Li, 2018). When the product has high quality, it becomes able to meet the goals and purposes of the customers. Under these circumstances, the customers can obtain the goal based satisfaction. The current discussion indicates that the functionality of the products improves when its quality improves. In other words, when the quality improves, the received benefit from it also increases. However, while assessing quality of the products to determine the value, considering the perspective of the customers is important (Zhang et al., 2017). From the point of view of the customers, the product quality can be categorized as the perceived product quality and the expected quality. The perceived quality indicates the level of satisfaction a customer derives from the product. On the contrary, the expected quality are the attributes the customers wish to obtain from the product. Cost--The perceived value of the product increases when the cost is low. The value of the product is determined by the cost and the tangible benefits obtained from it. The value of the product increases when larger tangible benefits are obtained at lower cost (Schwepker Jr and Ingram, 2016). On the contrary, the customers perceive the value of the products as lower when they need to pay higher price for it. Therefore, in order to increase the customer value, the businesses require reducing the cost. The customers consider the cost as a sacrifice from their part (Zhang, Liang and Wang, 2016). From the perspectives of the customers, the risk of failure of the product is also considered as the level of sacrifice (Xu Peak, and Prybutok, 2015). While purchasing the products, the customers consider
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CUSTOMER VALUE 5 receiving high value on their investment. So, when the customers pay higher price, they expect to receive higher value. As the expectation of the customers increases, the functionalities of the products also need to be improved. If the product fails to perform accordingly, the perceived benefit reduces. It causes reduction of the customer value. Customer service— Customer service can be considered as the support an organization offers to the customers. The customer service is provided before making any purchase or using the products. The additional assistance offered by an organization ensures that the customers are having an enjoyable and easy experience. Offering quality customer service is essential if an organization wants to retain customers and grow its business (Hsiao, Chang, and Tang, 2016). In the contemporary market, the customer service is not limited to the traditional support over telephone. Rather, the businesses are communicating with the organizations in several ways with help of the web, email, message, and social media (Payne, Frow, and Eggert, 2017). Several companies also enable the customers to obtain self-service support. With help of such assistances, the customers become able to find their own solutions whenever needed. In the recent days, the role of customer support is not providing answers only, but it has been emerged as a key part of the experiences offered to the customers. The customer service plays a key role to attain the customer satisfaction. When the businesses offer adequate customer service, the benefits received by the organizations increase. All the above efforts offered by the business are effective to enhance the amount of benefit derived from a product without affecting the cost. It, in turn, enhances the customer value. Logistics lead time—
CUSTOMER VALUE 6 The logistics lead time can be described as the sum of all transit time, processing time, and time spent by a product in the inventory. In other words, the logistics lead time represents the time which is needed by an item to travel from the supplier, through operations and finally to the end consumer. The transit time and processing can be expressed in days. Logistics lead time depends on a number of factors such as the time-efficiency of the suppliers, manufacturers and the inventory processes (Oh and Kim, 2017). The time to deliver a product to the customers depends significantly on the logistics lead time. When the lead time reduces, the customers also become able to get the product faster. The faster services improve the customer experience and so, the value of the products to them increases (Hapsari, Clemes, and Dean, 2016). However, reduction of the lead time and the associated increase to the product value depends significantly on the collaboration between the stakeholders. The businesses need to ensure that all the parties are giving equal effort to execute the operations efficiently. It, in turn, ensures that the products are getting delivered to the end users on time. Critical Reflection The statement of Porter indicates that the efforts of an organization to assist the customers is given more value than the acquisition and usage cost. In other words, offering customer service is more effective to enhance value of a product to the customers than using any other methods. The importance of customer service can be better understood from the concept of the perceived value of the products. The perceived value of the product depends on the evaluation of the customers regarding the performance of the particular product with respect to the peers. Offering the customer service makes using the product easier for the customers. With help of the additional assistances, the customers become able to enhance utility of the products. As the
CUSTOMER VALUE 7 utility of the products increases, its value also increases. The concept of perceived value is even more important in the markets where the businesses need to offer the products at competitive price. In these cases, offering discounts or using any other pricing strategy may not be effective to get attention of the customers. similarly, bringing variation in the functionality of the products is difficult when several alternative products are available in the market. In such markets, presence of the customer service helps an organization to create a distinctive image of its products among the customers. So, from the perspective of the businesses also, offering the customer service is more beneficial. The customer satisfaction model, suggested by Kano, indicates that the satisfaction level of the customers increases when the product attributes meet their expectations. As evident from the model, the satisfaction of the customers increases as the attributes of the products also increases. When the customers find any unexpected attribute in the product, the satisfaction level becomes higher. When purchasing product, the customers mainly expect presence of the physical attributes that can enhance functionality of the product. On the contrary, the customer service or the additional assistance offered by the organization is an unexpected attribute offered to them. As the customers receive something unexpected, they treat it with more value. The value of a product is determined by the benefits obtained and the cost. When the customer service is offered, the benefits obtained by the customers increases. However, the cost of the products remains same. As an effect, value of the product also increases with offering the customer service.
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CUSTOMER VALUE 8 References Hapsari, R., Clemes, M., and Dean, D., 2016. The mediating role of perceived value on the relationship between service quality and customer satisfaction: Evidence from Indonesian airline passengers.Procedia Economics and Finance,35, 388-395. Hsiao, C. H., Chang, J. J., and Tang, K. Y, 2016. Exploring the influential factors in continuance usage of mobile social Apps: Satisfaction, habit, and customer value perspectives.Telematics and Informatics,33(2), 342-355. Kumar,V.,andReinartz,W.,2016.Creatingenduringcustomervalue.Journalof Marketing,80(6), 36-68. Oh, H., and Kim, K., 2017. Customer satisfaction, service quality, and customer value: years 2000-2015.International Journal of Contemporary Hospitality Management,29(1), 2-29. Payne,A.,Frow,P.,andEggert,A.,2017.Thecustomervalueproposition:evolution, development, and application in marketing.Journal of the Academy of Marketing Science,45(4), 467-489. Schwepker Jr, C. H., and Ingram, T. N., 2016. Ethical leadership in the salesforce: effects on salesperson customer orientation, commitment to customer value and job stress.Journal of Business & Industrial Marketing,31(7), 914-927. Wu, Y. L., and Li, E. Y., 2018. Marketing mix, customer value, and customer loyalty in social commerce: A stimulus-organism-response perspective.Internet Research,28(1), 74-104.
CUSTOMER VALUE 9 Xu, C., Peak, D., and Prybutok, V., 2015. A customer value, satisfaction, and loyalty perspective of mobile application recommendations.Decision Support Systems,79, 171-183. Zhang, H., Liang, X., and Wang, S., 2016. Customer value anticipation, product innovativeness, and customer lifetime value: The moderating role of advertising strategy.Journal of Business Research,69(9), 3725-3730. Zhang, M., Guo, L., Hu, M., and Liu, W., 2017. Influence of customer engagement with companysocialnetworksonstickiness:Mediatingeffectofcustomervalue creation.International Journal of Information Management,37(3), 229-240.