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Customer Relationship Management




                    Notes          New Products – New Customers: This growth strategy is one  of diversification. The biggest
                                   challenge here is for managers to gain an awareness of the new expected value proposition.
                                   Managers must learn what the key drivers of value are for new customers. And at the same time
                                   they must align internal processes to  create value  in fundamentally new product offerings.
                                   Because the benefit of experience is lacking, this is usually the highest risk growth strategy.
                                   If the new products are simply an extension of traditional products, then the benefit of experience
                                   may be at least partially transferable. But the challenge of creating better value for new customers
                                   with new products while competing against new competitors is daunting.

                                   Concept of Value in Business Markets

                                   A number of aspects need to be considered in defining the concept of value in business markets.
                                   Christopher (1982) considers value  in terms  of the  price a  customer is willing to pay for  a
                                   product offering, and points out that willingness to pay needs to be understood in terms of the
                                   set of perceived benefits that the product offering provides to a customer firm. He relates this
                                   aspect of value to the notion of a customer surplus, which he expresses as the amount by which
                                   the monetary equivalent of the set of perceived benefits exceeds the price paid for it. Reuter
                                   (1986) introduces the notion of “usage value” which represents the value associated with the
                                   performance of the product in a given customer application. As Reuter (1986, p. 79) writes,
                                   “Especially in industrial products, the value analyst is primarily concerned with use value—the
                                   performance and reliability of the product — rather than its existing value (based on prestige or
                                   aesthetics, cost value, or exchange value).” Usage value appears to be closely  related to the
                                   concept of a product offering’s value-in-use (Wind 1990). Forbis and Mehta (1981) emphasize the
                                   aspect of competition in considering value. They introduce the concept of “economic value to
                                   the customer (EVC),” which refers to the maximum amount a customer firm would be willing
                                   to pay, given comprehensive knowledge  of a  focal product offering and the other, available
                                   competitive product offerings. This suggests that customer firms consider the value of a product
                                   offering relative to alternative offerings.
                                   In sum, the concept of value in business markets: is perceptual in nature and should be expressed
                                   in monetary terms; needs to be viewed with respect to the set of benefits that the  customer
                                   receives from usage of the product offering; and is inherently framed against a competitive
                                   backdrop.
                                   Thus, we define value in business markets as the perceived worth in monetary units of the set of
                                   economic, technical, service and social benefits received by a customer firm in exchange for the
                                   price paid for a product offering, taking into consideration the available alternative suppliers’
                                   offerings and prices.’




                                      Task  What do understand by customer value?


                                       !

                                     Caution  Information providers should be guaranteed the right to withdraw their agreement,
                                     to require to see/provide/correct, to deny requests to see/correct/ delete information,
                                     and be given the right to a legal representative about the information they have provided.
                                     The company should also respond immediately  to the  information provider’s request
                                     with the appropriate measures and publish or inform  the information  provider of the
                                     results.






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