Page 23 - DMGT408DMGT203_Marketing Management

Marketing Management/Essentials of Marketing

Notes 12. 4Ps includes which one of the following?
(a) Process (b) Prize
(c) Place (d) Packing

1.4 Creating and Capturing Customer Value

In developed and developing economies, consumers have several products or brands to choose
from to satisfy a given need or a group of needs. Much depends on what consumers' perceptions
are about the value that different products or services are expected to deliver. The sources that
build customer expectations include experience with products, friends, family members,
neighbours, associates, consumer reports, and marketing communications. Customer value is
the ratio of perceived benefits and costs that the customer has to incur in acquiring that product
or service. The emphasis here is on customers' perceptions and not the accurate, objective
evaluation of value and costs, as customers often do not judge values and costs accurately. Value
indicates that a certain product or service is perceived as having the kinds and amounts of
benefits (economic, functional, and emotional) that customers expect from that product or service
at a certain cost (monetary costs, time costs, psychic, and energy costs). Thus, value is primarily
determined by a combination of quality, service, and cost. The value to the customer can be
made favourable either by increasing the total benefits at the same cost, maintaining the same
benefit level and decreasing the cost, or increasing both the benefits and the costs, but the
proportion of benefits is higher than the increase in costs.
Figure 1.3: Satisfaction Depend on Customers' Perceived Total Costs and Value

Product Service Image Personal Total
Value Value Value Value Value
Customer
Delivered
Value
Monetary Time Psychic Energy Total
Cost Cost Cost Cost Cost

Customers generally experience satisfaction when the performance level meets or exceeds the
minimum performance expectation levels. Similarly, when the performance level far exceeds
the desired performance level, the customer will not only be satisfied but will also most likely
be delighted. Therefore, rewarding experience with a given product or service encourages
customers to repeat the same behaviour in future (buying the same brand). A delighted customer
is likely to be committed and enthusiastic about a particular brand is usually unlikely to be
influenced by a competitor's actions and is an asset to the marketer, being inclined to spread
favourable word-of-mouth information or opinions.

Example: Suppose a customer goes to a restaurant and is treated with excellent food,
ambience and service. Such a customer is likely to come back to the same restaurant in future
and advise his friends too to visit it.
When a customer's perceived performance level is below expectations, it definitely causes
dissatisfaction and the brand (product or service) will probably not be purchased on any future
occasion. In extreme cases of dissatisfaction, the customer might even completely abandon the
company and bad-mouth its products or services, a process over which a marketer has no
control. In the true sense, marketing starts with the customer and ends with customer.

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