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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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