Page 33 - DMGT308_CUSTOMER_RELATIONSHIP_MANAGEMENT

Customer Relationship Management

Notes Other product mix characteristics might include the quality of the products, specific brands, and
merchandise displays. In total, it may be possible for customers to identify thirty, forty, or even
fifty different characteristics of the store and products that shape perceptions of value.
In addition to the product characteristics, service factors also shape value perceptions.
These might include the availability, knowledge, and helpfulness of cashiers and clerks or the
ease of making returns and exchanges. Service factors would also include the customer service
issues of call centres, complaint handling, and information availability.
Since products are often fairly homogeneous across competitors, these service factors have
become increasingly important to customers in differentiating between competitors.
In fact, many managers feel that service factors are the only area to create a real competitive
difference.
Price factors would include everyday prices, sales prices, acceptance of credit cards, and
promotional financing. Price might also include life cycle costs that the customer would incur
such as maintenance, repair, and operating costs. Customers balance the product and service
performance of a firm against these price considerations in some way to form perceptions of
value.
Customers will also use a store’s image in evaluating value. Very often customers cannot easily
evaluate all of these product, service, and price characteristics. So the store image becomes a
surrogate cue for product or service quality. For example, a customer may not be technically
knowledgeable about shoes, but if Harrods or Saks or Nordstrom carries the brand, they must
be good. Customers may use a variety of factors to evaluate image. These could include the
attire and professionalism of personnel, quality of advertising, innovativeness, corporate
citizenship, and community involvement.
Collectively, these dimensions of image help customers make decisions about product, service,
and price issues.
Based on the day to day interactions between a customer and employees, more personal
relationships may develop. Customers may prefer to deal with a particular sales clerk.

Example: It is likely that relationships are more critical in business to business situations
than in a retail consumer situation.
While the previous example was for a department store, the same concepts will apply to almost
any business. The categories of product, service, price, image, and relationship will shape the
customers’ perceptions of value in any business. What does change are the specific attributes
within each category? The components of service would be quite different for a department
store versus auto repair. Usually managers are also surprised at the number of different attributes
that customers use to evaluate a firm’s value proposition.
Collectively, customers may be able to identify between fifty and one hundred different attributes
that shape perceptions of value. In numerous cases, over one hundred attributes have been
identified. The challenge for managers becomes the identification of the key drivers of value,
those really important things that the customers want or expect. If managers can identify and
manage these key drivers of value, their organizations will be far more successful, and they will
grow and prosper. If managers cannot identify what the key drivers of value are, their
organizations will be in a weaker competitive position.
So it becomes critical that managers have a clear view of the key drivers of value, normally a
subset of 20 - 30 attributes that shape the customers’ view of a firm’s value proposition. Since the
customer evaluates a value proposition relative to competitive alternatives, a firm must also

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