Page 45 - DMGT308_CUSTOMER_RELATIONSHIP_MANAGEMENT

Customer Relationship Management

Notes
Example: Product and corporate information and, in particular, the ability to understand
the features, functions, benefits, and use of a product enhance the perceived value of a product
during its purchase and consumption. The physical environment in which a product is purchased
or consumed is also an important source of value, particularly in the retail and service industries.
Finally, transaction experiences are created through customer interactions with salespeople,
other staff, and transaction systems or processes. The source of this value is the customer–
employee–organization interaction. The type of value created is usually experiential, but
interactions could provide functional/instrumental value (such as taking a correct order in a
restaurant), symbolic/expressive value (such as being upgraded to first class on an airline
flight), or even value concerned with the cost/sacrifice aspect of value (such as being served
quickly or in a stress-reducing manner).
Drawing on, integrating, and extending previous conceptual foundations, a customer value
framework is proposed that builds on the strengths of previous frameworks and mitigates their
key weaknesses (as identified above). This framework adopts a strategic orientation in that the
focus is on identifying categories of value that could differentiate offerings and not on identifying
all of the specific benefits and sacrifices that may be perceived by consumers or customers. Our
intent is to develop a comprehensive framework applicable to consumer and business contexts,
and goods as well as services. The specific benefits and sacrifices considered in an overall
assessment of value are known to differ in these different contexts, but we suggest that the
categories of value are the same.

The framework identifies four major types of value that can be created by organizations—
 Functional/instrumental value,
 Experiential/hedonic value,

 Symbolic/expressive value, and
 Cost/sacrifice value.
The framework also identifies five major sources of value—information, products, interactions,
environment, and ownership—that are associated with central value-chain processes. The
resultant 4 × 5 table is useful for describing and documenting customer value creation strategies
and serves as a tool for opportunity recognition and product concept specification. It also provides
a foundation for measuring or assessing value creation strategies.

Framework Application

The framework for customer value creation strategies serves as a tool for:
(1) describing a generic marketing strategy,
(2) enhancing product concept specifications,

(3) identifying value creation opportunities, and
(4) developing measures of customer value.
These will be discussed in order.

Marketing Strategy

The framework is useful for describing generic marketing strategies, understanding positioning,
and identifying sources of competitive advantage.

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