Customer Value Management & Research

This assignment delves into the crucial topic of customer value management. It examines various academic sources that discuss the evolution and importance of understanding customer value within a marketing context. Key concepts like customer-dominant value formation, service marketing research methodologies, and integrated visions of customer value are explored through influential studies and publications. The assignment emphasizes practical applications by referencing examples in industries such as construction, hospitality, and business-to-business (B2B) sectors.

MARKETING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Various components that enable an organization to determine and calculate a customer's
lifetime value..........................................................................................................................1
P2. Benefits of customer lifetime value to the organization..................................................3
P3 Factors that influence the customer lifetime value...........................................................4
TASK 2............................................................................................................................................6
P4 Types of market segmentation strategies that can be applied to customer base...............6
P5 B2C and B2B decision making models and opportunities for application of customer
value creation..........................................................................................................................7
TASK 3............................................................................................................................................8
P6 Different techniques and methods applied by organization to increase customer
relationships and loyalty.........................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Customer value management implies to measurement of organisation's customer’s views
of the estimated values for amount delivered relative to that customers to their competitors. It is
essential marketing or business tool because it connects to key performance indicators directly.
Customer perception of towards products and service value within the market place can be
measured through surveys which ask customers a series of predefined questions (Verhoef and
Lemon, 2013). Present report is based on analysis of various components which have enabled
TESCO to determine and measure customer lifetime value and its benefits. Along with this,
factors that influence customer lifetime value are also determined. TESCO is an international
retail business enterprise which has its various outlets across countries. For accomplishment of
established objectives, company provides its emphasis on increasing customer's values towards
products and services. In this report, various types of market segmentation strategies are also
determined which are applied by TESCO to its customer base. Further, B2C and B2B models of
decision making are also evaluated along with the application of customer lifetime value. At last,
various techniques and methods applied by organisation are also discussed here.
TASK 1
P1. Various components that enable an organization to determine and calculate a customer's
lifetime value
In traditional concept, marketing refers to practices which are accomplished by
management to attract customers for selling of products and services. Earlier, companies were
having their focus on the application of new and important marketing strategies to increase their
sales. After a rapid increase in competition, companies are providing their major emphasis on
creation of value among their target consumers for products and services to develop the
relationship with customers and brand loyalty (Armstrong and et.al, 2015). In retail sector,
companies need to analyse that values among customers can also be created by forming an
expectations value and acting upon it long with their usage of experience and expectations.
TESCO has achieved high growth in the market due to its valuable products and services. In this
context, there are various important components determined that enable the organisation to
demonstrate and measure customer lifetime value such as:

 Customers Value: It implies to the perception of what a product or service is worth to
consumers versus effective possible alternatives. Value will be created by focusing on
the processes and systems as much as it is mind-set and culture. In order to improve the
customer value, management of TESCO also has emphasis upon improvement of their
processes and systems of marketing as well as sales so that they will be able to provide
moral focus on customer’s requirements (Goetsch and Davis, 2014). Employees must
also recognise what their customers perceive as value and their views towards products of
competitors. Customer Satisfaction: It implies to the person’s feeling of pleasure and resulting from
comparing a perceived value performance of product in accordance with individual’s
perception. In order to improve customer’s relationship management, manager of TESCO
needs to provide focus of improvement of quality of products and application of effective
marketing techniques so that customers will get attracted towards their product.
Participation of employees will be taken to get innovative ideas and application of
effective management to promote products and services.
 Customer Retention: It implies to practices for sustaining previous customers towards
organisation which is important for maintaining sales and profitability in market. In retail
sector, customer retention is essential market oriented strategic planning which is
performed by organisation to determine customer's value towards products and services
(Kumar and Reinartz, 2018).
CLV is important and common matrix that helps in understanding the perceived value of
customers towards products and services in comparison with competitors. Value of customers
towards TESCO products will come from calculation of costs associated with decisions such as
brand, sales personnel, corporate brand and functional image.
Some important components which are used to calculate CLV for TESCO are:
 Average revenue per user: In this, average revenue achieved by organisation from
consumer per month (Beckers, Risselada and Verhoef, 2014).
 Cohort analysis: It also involves different factors which carry out some changes in
organisation within specified period. This aids sales staff to understand fluctuation in
customer preference towards products within specified time duration. Further, CLV
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measurement for TESCO depends upon factors such as market fluctuations, current
trends, seasonality and changes in customer perception as well as requirements.
 Individualized CLV: This implies identification of total value which has been created
by organisation in individual customer through various channels such as E commerce,
campaigns and other important channels (O'cass and Ngo, 2012).
P2. Benefits of customer lifetime value to the organization
In marketing, CLV is an important metric which represents overall net profits made by
company from an individual customer. It is projected to estimate monetary worth to a business
after factoring in the value of relationship with a customer over time. In this, CLV is important
for TESCO to raise its customer relationship which helps in achievement of high profitability
and market share. Further, there are various benefits of customer lifetime values for TESCO as
mentioned below:
 Saving financial resources: Findings state that it is cheaper to retain old customers
rather than finding new one. When company knows their customers and benefits they
seek from products and services, then it can focus upon their resources on these rather
than trying to please customers (Ryu, Lee and Gon Kim, 2012). In this context, CLV is
beneficial for TESCO as it determined various strategies through which company can
retain old customers and reduce its operating cost in finding new customers on social
media, newspaper, E-commerce and other websites. However, company should keep
database of their previous customer and send emails to provide information about prices
and products. Better marketing: CLV leads to a marketing which is focused on customers of TESCO.
This equates to calculation of benefits of their products rather than features. Through this,
sales employees will also get recognition about estimated sales which is required to be
fulfilled by providing quality service to customers (Weinstein and Pohlman, 2015). By
calculating CLV, company will be able to get understand the perception of individual
customer from a particular segment which tends to achieve high value among customers. Encouraging brand loyalty: through analysis of perceived values of customers towards
products, TESCO will be able to make difference and improvements in their products so
that customers requirements will be fulfilled effectively. When customer will get
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products and service at appropriate quality and prices, there loyalty towards brand will
tend to raise and they always prefer to buy as well as promote products of TESCO
among their relatives. Further, continuous contact also enables company to embrace or
foster its brand recognition and loyalty among customers. Customer segmentation: CLV provides competencies to business of TESCO to
determined customers groups and distinctive potential customer groups through long term
profitability. This aids management to decide whether it is effective to change company's
market strategy or not (Aarikka-Stenroos and Jaakkola, 2012). Further, it is also used as
early warning system for detecting rates. It identifies the segment in which problems has
originated so that actions can be taken to correct the issues. Gaining more sales: CLV will also enable retail enterprise to maintain effective
relationship with customers through regular contact and maintaining effective
relationship with customers. With effective management, company tend to raise
satisfaction of customers and will attain high sales in market in comparison with
competitors. TESCO should always send them their latest promotion with an effective
call to action.
 Time saving: By making effective concentration on target market and the loyal
customers. Company will save time and money by not wasting efforts in promotional
practices. This will also intend the TESCO to embrace promotion for reduction high and
average customer practices (Nijssen and Frambach, 2013).
However, it can be said that effective customer relationship will embrace TESCO to
achieve high share in market. This will help to home base to gain a better share of market and
help company to meet the requirements of customers and achieve a better revenue in return of
resources it has implemented.
P3 Factors that influence the customer lifetime value.
In this competitive era of business, marketers have faced various challenges in
influencing and developing relationship with customers because influenced by external factors
which are not within control of organisation (Martelo Landroguez, Barroso Castro and Cepeda-
Carrión, 2013). In this context, TESCO has also provide major responsibilities to marketers for
analysis of these factors and undertake effective measures to resolve problems. In retail industry,
CLV of company will also differ in both B2C and B2B context because apply different strategies
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to sell their products in both situation. B2B business implies to situation in which business
provide its products to another company to sell their products in market. Further, B2C implies
to medium in which company provide their products to customers. CLV in business to
customers is important factors which stated that managers of TESCO needs to analyse
requirement of their end users and behaviour because it will also provide impact on sales and
revenue of enterprise (Jacobs, Chase and Lummus, 2014). CLV in business to business
framework implies to situation in which company provides its products to another company for
selling their products. Further, TESCO also source products from their suppliers to resell them to
customers for earning profits. In this, organisation will need to understand requirement of their
clients and calculate customer lifetime value. Further, there are some important factors have
been identified that influence customers such as:
 Consumer purchasing: Buying behaviour or capacity of customers provide major
influence on CLV of TESCO because it will determine possibility of increase in sales of
products and services in market. It enables company to provide products better products
and service to consumer.
 Stakeholder: Key individuals that influence CLV of TESCO are its stakeholder such as
competitors, employees, government and shareholders because they also build and
influence perception of customers in market. For example: Government decisions of
over products and service of TESCO will also affect lifetime value of customer towards
products.
 Customer loyalty: High loyalty of customers towards products and services will
increase capabilities of TESCO to sustain in retail and help in attracting new customers.
High preference and demand of products has increase recognition of TESCO in overseas
nations and provided opportunities to expand business operations (Nguyen and Mutum,
2012). Company services: Quality of products and service also affects decision as well as value
of customer towards products. In present era, people usually buy quality products at
reasonable prices. Further, Supply chain of company in other countries also influence
lifetime value of customers and development a wide perception . For example;
McDonald has its huge and effective supply chain in market therefore its CLV has been
increasing continuous in market (Heinonen, Strandvik and Voima, 2013). Quality
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products are served by McDonald at low price which has increased their sales and
revenue in market along with brand loyalty among customers.
 Product features: Attractiveness and useful of products will influence customer
perception in market and also tends to raise sales of products. Products with unique and
attractive features which are tangible to customer will also affect customers. In this
context, TESCO also provide more emphasis on increasing quality and unique features of
products to raise lifetime value of products among customers.
TASK 2
P4 Types of market segmentation strategies that can be applied to customer base.
Segmentation is a process of classifying broad consumer or market of business which
normally consisting of existing and potential consumers in to sub groups of consumers which
is based some kind of characteristics. It enables marketing team of TESCO to stretch budgets
and make the most marketing dollars by attracting to wide ideal customers who are likely
become leads, without wasting money on impression that they will never turn in to conversions.
In this context, there are five different strategies that can be applied for segmentation of
customers base by TESCO such as:
Geographic: In this strategy, company tends to target its potential customers from different
geographical segments in countries (Kelly, Male and Graham, 2014). They can also select to
offer products or service specially for their customers in particular locations. For example;
Home depot may target US northern states when advertising as sales on snow shovels.
Company will apply this strategy when they offer some unique product or service for particular
customers segments.
Demographic B2C: It implies to segmentation of market by company on the basis of certain
characteristics of audience such as age, gender, size, religion education etc. In this, company can
the market based on certain characteristics of audience. It is more efficient in targeting high
customer segmentation and huge variety that influence customer to purchase products and
services.
Demographic B2B: It is also used in B2B context as organisation will tend to embrace customers
with high variety of products and services. In this, business will target another companies on
the basis of their size, industry, role, time working for organisation etc.
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Psycho-graphic: It is more concrete than geographic and demographic customer segmentation
as characteristics used for dividing customer base are less tangible than the latter two. In this,
company will intend to target their customers on the basis of life style, values, social class and
personalty (Wouters and Kirchberger, 2015). For example: Discounting stores like Wal-Mart
use this tactic effectively because it will provide them wide audience which they are trying to
gain.
Behavioural: It is similar with psycho-graphic segmentation on the basis which is less concrete
than demographic segmentation or segmentation. In this customer base is targeted by company
on the basis of usage, loyalties, awareness, occasions and purchasing patterns.
From the above, it is concluded that TESCO needs to adopt demographic segmentation
strategy as they regulate their business in both B2C and B2B context in retail sector. In B2C,
they will customers having high house hold income which are capable and desire to purchase
quality products. In B2B, they should target small and medium size enterprise to increase their
recognition as well as sale of products in countries.
P5 B2C and B2B decision making models and opportunities for application of customer value
creation.
Clients decision making is analysed as association of people having desire to participate in
process of making effective decisions for purchasing wide and single unit of consumers for wide
range of products and service. B2C is also an effective decision making model in which
company will focus upon consumer of products and service. Customers value creation will
depend upon the process which is followed by consumer while making decisions to purchase
products and services.
B2B: It implies to the way through which customers will take decision to purchase products and
service of organisation. In this decision making model, customers will provide more emphasis
on products and service quality (Kumar and Reinartz, 2018). They tends to buy the products
which are highly beneficial for them and available at competitive prices in market. In this,
TESCO focus on identification of needs and requirements of their customers. Market research
will undertake in which marketers of company will take interview of their customers to identify
unique features which attract their consumers to buy the products and service in market.
Potential customers in this phase will also identify problem which they have faced in future
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while using products and service. By analysing those problems. Organisation should be
improves their service to satisfy customers requirements.
B2C: It implies to process which is followed by business to purchase products from another
company. It usually involves the analysis of various components such as demand of products,
supply and products features, feasibility, prices and promotion. In this context, TESCO has its
relationship with various other companies in other countries because it provide them products
for selling to their customers (Goetsch and Davis, 2014). In this , company will analyse that
their products needs to be effective four these companies. It should provide them high
profitability and sales in market. Further, TESCO also has its strong brand loyalty among
customers in market which enable their clients companies to attract customers and earn high
profitability.
Customers value creation is considered as development of mutual value for their overall
consumers base in any part of the end to end customer experience across full customer life cycle
, spanning customers by consumer relating to their alternatives and relating to all costs they
endure and relative to outcomes they are pursuing.
TASK 3
P6 Different techniques and methods applied by organization to increase customer relationships
and loyalty
Customer relationship management is analysed as effective marketing approach which involved
communication of organisation or its employees with their customers in order to provide them
information about new products and service. This technique has been used by company for
creation brand loyalty and retention of customers. There are various techniques which can be
applied by TESCO for creation of effective relationship with customers such as:
 Communication: It is most important techniques that can be used by company to
embrace relationship with customers. This implies to use of various channel such as
internet, E commerce website, social media and digital advertisement (Weinstein and
Pohlman, 2015). This aids management to create influence on customers to buy their
products and service in market.
 Rewards and recognition: Customers rewards schemes should be developed by TESCO
to improve its relationship with customers and helps them in meeting their requirements.
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Recognition of potential customer in their store will also tends to creates loyalty of other
customers towards organisation.
 Discounting: Special discounting offers also important for increasing value of products
and service among customers. Brand loyalty of customers will also get influenced
through these discount offers because consumers will always buy products which are
available at low prices.
 Extra service: Value added services are also provided by company to its customers so that
they will not change their focus on buying products of competitors in market.
 Continuous updates: By keeping data base of regular customers, TESCO also provide
regular updates to their customers through Email which in turn creates effective
relationship and loyalty of customers towards organization.
CONCLUSION
In this report, it has been concluded that customers value management is important part
of marketing which enable the organisation to achieve its objectives. Effective relationship with
customers tends to embrace sales, profitability and brand recognition of TESCO in retail
industry. TESCO needs to adopt demographic segmentation strategy as they regulate their
business in both B2C and B2B context in retail sector. Supply chain of company in other
countries also influence lifetime value of customers and development a wide perception. Brand
loyalty of customers will also get influenced through these discount offers because consumers
will always buy products which are available at low prices.
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REFERENCES
Books and Journals
Aarikka-Stenroos, L. and Jaakkola, E., 2012. Value co-creation in knowledge intensive business
services: A dyadic perspective on the joint problem solving process. Industrial
marketing management, 41(1), pp.15-26.
Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction.
Pearson Education.
Beckers, S.F., Risselada, H. and Verhoef, P.C., 2014. Customer engagement: A new frontier in
customer value management. Handbook of service marketing research, 2(6), pp.97-120.
Goetsch, D.L. and Davis, S.B., 2014. Quality management for organizational excellence. Upper
Saddle River, NJ: pearson.
Heinonen, K., Strandvik, T. and Voima, P., 2013. Customer dominant value formation in
service. European Business Review, 25(2), pp.104-123.
Jacobs, F.R., Chase, R.B. and Lummus, R.R., 2014. Operations and supply chain management
(pp. 533-535). New York, NY: McGraw-Hill/Irwin.
Kelly, J., Male, S. and Graham, D., 2014. Value management of construction projects. John
Wiley & Sons.
Kumar, V. and Reinartz, W., 2018. Customer relationship management: Concept, strategy, and
tools. Springer.
Martelo Landroguez, S., Barroso Castro, C. and Cepeda-Carrión, G., 2013. Developing an
integrated vision of customer value. Journal of Services Marketing, 27(3), pp.234-244.
Nguyen, B. and Mutum, D.S., 2012. A review of customer relationship management: successes,
advances, pitfalls and futures. Business Process Management Journal, 18(3), pp.400-
419.
Nijssen, E.J. and Frambach, R.T., 2013. Creating customer value through strategic marketing
planning: A management approach. Springer Science & Business Media.
O'cass, A. and Ngo, L.V., 2012. Creating superior customer value for B2B firms through
supplier firm capabilities. Industrial Marketing Management, 41(1), pp.125-135.
Ryu, K., Lee, H.R. and Gon Kim, W., 2012. The influence of the quality of the physical
environment, food, and service on restaurant image, customer perceived value, customer
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satisfaction, and behavioral intentions. International Journal of Contemporary
Hospitality Management, 24(2), pp.200-223.
Verhoef, P.C. and Lemon, K.N., 2013. Successful customer value management: Key lessons and
emerging trends. European Management Journal, 31(1), pp.1-15.
Weinstein, A. and Pohlman, R.A., 2015. Customer value: a new paradigm for marketing
management. In Proceedings of the 1997 Academy of Marketing Science (AMS) Annual
Conference (pp. 132-133). Springer, Cham.
Wouters, M. and Kirchberger, M.A., 2015. Customer value propositions as interorganizational
management accounting to support customer collaboration. Industrial Marketing
Management, 46, pp.54-67.
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