Page 43 - DMGT308_CUSTOMER_RELATIONSHIP_MANAGEMENT

Customer Relationship Management

Notes Self Assessment

Fill in the blanks:
11. …………………… is performing activities that increase the value of goods or services to
consumers.

12. The ultimate goal of value creation is …………………….
13. …………………… ……………………, …………………… is the process of using intellectual
capital to create new products or services that generate positive business results in the
form of financial returns.
14. Companies can create shared value opportunities in …………………… ways.
15. Creating Shared Value is a business concept first introduced in …………………… article
Strategy & Society: The Link between Competitive Advantage and Corporate Social
Responsibility.
Conceptual Foundations

The emerging customer value paradigm and theory of the firm (e.g., Hunt 1999; Hunt and
Morgan 1997; Slater 1997) suggests that firms exist to create value for others where it is neither
efficient nor effective for buyers to attempt to satisfy their own needs. From this perspective, the
objective of marketing is to achieve personal, organizational, and societal objectives by creating
superior customer value for (exchange with) one or more market segments with a sustainable
strategy.
Despite the centrality of customer value to marketing thought, customer value research is still
nascent and in the early stages of conceptual development. Although popular works have focused
on normative customer value creation strategies (e.g., Slywotzky 1996; Treacy and Wiersama
1993), preliminary academic work has focused on the importance of the customer value concept
(e.g., Band 1991; Gale 1994) and definitions, conceptualizations, and typologies of customer
value (e.g., Ulaga 2003; Woodall 2003; Woodruf1997).

Customer Value Creation Frameworks

Just as there is no commonly accepted definition of customer value, there is no definitive
conceptualization, framework, or typology of customer value. Some attempts have been made;
and while each has its merits, none are particularly well suited as aids for either developing
marketing strategy or for developing measures of customer value.

In an early conceptualization of consumer needs, Park, Jawarski, and MacInnis (1986) describe
three basic consumer needs that reflect value dimensions—functional needs, symbolic needs,
and experiential needs. Functional needs are those that motivate the search for products that
solve consumption-related problems. Symbolic needs are desires for products that fulfill internally
generated needs for self-enhancement, role position, group membership, or ego-identification.
Experiential needs are desires for products that provide sensory pleasure, variety, or cognitive
stimulation. Consumer needs, wants, and preferences underlie value perceptions. Consequently,
three basic types of value are implicitly suggested by Park, Jawarski, and MacInnis (1986)—
functional value, symbolic value, and experiential value. This typology, however, does not
capture the cost/sacrifice aspect of customer value suggested by the simple definition, nor does
it suggest sub dimensions of the higher-order constructs.

Sheth, Newman, and Gross (1991) describe five types of value that drive consumer choice—
functional value, social value, emotional value, epistemic value, and conditional value. Functional

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