Strategic Marketing Plan Strategy Evaluation

A small-business owner and his team prepare a strategic marketing plan on an annual basis. The
plan describes the actions they intend to take to accomplish the company's goals, such as
increased revenue, higher market share and greater profitability. A major challenge in strategic
planning is choosing which strategies to put into action. A business owner has many alternative
strategies, and limited financial and human resources with which to implement them. He makes
these choices through a process of strategy evaluation.
What's Working Well

Strategies that are achieving favorable results can be continued in the upcoming year and
beyond. Success of a marketing strategy is measured in more ways than just how much revenue
was generated. The marketing manager tracks metrics called key performance indicators -- or
KPIs -- that help to evaluate in detail how well a strategy is working. For example, a manager
can track how many customer inquiries were received in a given period after a major marketing
initiative such as an advertising campaign, and can also track how many of these inquiries
resulted in sales. This information demonstrates whether the marketing message got through to
target customers, and how effective the sales staff was in convincing customers to buy.
Cost vs. Benefit

The reality of limited resources in a small business makes it imperative that the business owner
allocate marketing resources carefully. You and your team must assess the likelihood that the
marketing dollars you spend to implement your strategies will achieve positive results. Have an
open dialogue with your team and ask for their frank opinions about which strategies they
believe will succeed and why. Great strategies can fail because of poor execution. Strategies are
accompanied by tactical plans -- the specific steps to implement them and the cost. In evaluating
strategies, also assess whether you have the skilled personnel and financial resources to
implement them effectively.
Long-Range Impact

When evaluating strategic choices, consider potential long-range benefits, not just immediate
sales results. For example, allocating part of the marketing budget to charitable activities, such as
sponsoring local youth sports teams, helps build goodwill within the community. The positive
image you create for your company will translate to acquiring customers over the long term.
Positioning vs. Competitors

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Your competitors want to take existing customers from you, and acquire new customers at a
more rapid rate than you are. Monitor your competitors' pricing as well as other strategic actions
they may be taking to gain an advantage over you. When creating a strategic marketing plan, a
major objective is devising strategies to counter those of your competitors that are negatively
impacting your business.
Growth Opportunities

Your company needs to keep innovating and evolving or risk reaching a state of stagnation
where sales go on the decline. The strategy evaluation process requires you to assess what the
best growth opportunities are for your company and devise actions -- strategies and tactics -- to
take advantage of them. Your choices include adding new products or services to what you
currently offer customers, expanding your sales territory by entering new markets, adding
distribution channels so customers will see your products in more locations, and aggressively
marketing to customer groups you may not have gone after in the past. At the end of the strategy
evaluation process, you will be able to rank these opportunities according to which ones offer the
greatest sales potential

Strategy Evaluation Process and its Significance

Strategy Evaluation is as significant as strategy formulation because it throws light on the
efficiency and effectiveness of the comprehensive plans in achieving the desired results. The
managers can also assess the appropriateness of the current strategy in todays dynamic world
with socio-economic, political and technological innovations. Strategic Evaluation is the final
phase of strategic management.

The significance of strategy evaluation lies in its capacity to co-ordinate the task performed
by managers, groups, departments etc, through control of performance. Strategic Evaluation
is significant because of various factors such as - developing inputs for new strategic planning,
the urge for feedback, appraisal and reward, development of the strategic management process,
judging the validity of strategic choice etc.

The process of Strategy Evaluation consists of following steps-

1. Fixing benchmark of performance - While fixing the benchmark, strategists encounter

questions such as - what benchmarks to set, how to set them and how to express them. In
order to determine the benchmark performance to be set, it is essential to discover the
special requirements for performing the main task. The performance indicator that best
identify and express the special requirements might then be determined to be used for
evaluation. The organization can use both quantitative and qualitative criteria for
comprehensive assessment of performance. Quantitative criteria includes determination
of net profit, ROI, earning per share, cost of production, rate of employee turnover etc.

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 Among the Qualitative factors are subjective evaluation of factors such as - skills and
competencies, risk taking potential, flexibility etc.
2. Measurement of performance - The standard performance is a bench mark with which
the actual performance is to be compared. The reporting and communication system help
in measuring the performance. If appropriate means are available for measuring the
performance and if the standards are set in the right manner, strategy evaluation becomes
easier. But various factors such as managers contribution are difficult to measure.
Similarly divisional performance is sometimes difficult to measure as compared to
individual performance. Thus, variable objectives must be created against which
measurement of performance can be done. The measurement must be done at right time
else evaluation will not meet its purpose. For measuring the performance, financial
statements like - balance sheet, profit and loss account must be prepared on an annual
basis.
3. Analyzing Variance - While measuring the actual performance and comparing it with
standard performance there may be variances which must be analyzed. The strategists
must mention the degree of tolerance limits between which the variance between actual
and standard performance may be accepted. The positive deviation indicates a better
performance but it is quite unusual exceeding the target always. The negative deviation is
an issue of concern because it indicates a shortfall in performance. Thus in this case the
strategists must discover the causes of deviation and must take corrective action to
overcome it.
4. Taking Corrective Action - Once the deviation in performance is identified, it is
essential to plan for a corrective action. If the performance is consistently less than the
desired performance, the strategists must carry a detailed analysis of the factors
responsible for such performance. If the strategists discover that the organizational
potential does not match with the performance requirements, then the standards must be
lowered. Another rare and drastic corrective action is reformulating the strategy which
requires going back to the process of strategic management, reframing of plans according
to new resource allocation trend and consequent means going to the beginning point of
strategic management process.

Marketing Control Process

Introduction to Marketing Control
It is true to say that planning gives direction to an organisation, planning enable an organisation
to achieve its objectives, but without control measures planning is of no mean, it's just an empty
exercise without control.

Business organisations do marketing planning to incorporate overall marketing objectives,

strategies, and programs of actions designed to achieve marketing objectives. Marketing
Planning involves setting objectives and targets, and communicating these targets to people
responsible to achieve them.

After an organisation develops and implements the marketing plan, next task is to control the
marketing performance. Marketing plans and strategies are required to be monitored, evaluated,
and adapted to meet the changing market environment, market needs, and market opportunities.

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The process by which an organisation adapts its marketing plans and strategies to reach its
marketing objectives is called marketing control.

Definition of Marketing Control

Marketing Control can be defined as "the process of measuring and evaluating the results of
marketing strategies and plans, and taking corrective action to ensure that marketing objectives
are achieved."

Marketing Control can also be defined as "the set of practises and procedures employed by firms
to monitor and regulate their marketing activities in achieving their marketing objectives."

Meaning of Marketing Control

Developing and implementing marketing plan is not enough to reach marketing objectives;
marketing plans and strategies are required to be monitored, evaluated, and adapted to meet the
changing market environment, needs, and opportunities. Marketing control ensures performance
improvement by minimising gap between desired results and actual results. If the actual results
are found deviated from the expected results, plans and strategies are adapted to bring
the results back to the desired level.

Marketing Control Process

Marketing control is a four step process :-
1. Define Marketing Objectives
2. Set Performance Standards
3. Compare Results Against Standards
4. Corrections and Alterations
Resources are scarce and costly so it is important to control marketing plans. Controlling
marketing plan is not an one time activity, it is a series of actions, and it is required to be done
regularly. Marketing control process starts with the review of the marketing objectives.

After defining/redefining marketing objectives, performance standards are set. Performance

standards provide benchmarks to enable managers and employees to decide how they are
progressing towards achieving objectives.

Actual results are compared against standards. If the actual results are in direction to the
expected results, their is no problem in marketing plan and its execution.

If actual results are deviated from the expected results, their is requirement to correct and alter
marketing plan to bring the results back to the desired level.

Social Marketing Concept

Social Marketing: Meaning, Applications and Advantages of Social Marketing!
Meaning:

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Social marketing is the systematic application of marketing along with other concepts and
techniques to achieve specific behavioural goals for a social good. For example, this may include
asking people not to smoke in public areas, asking them to use seat belts or prompting to make
them follow speed limits.

The primary aim of social marketing is ‘social good’, whereas in commercial marketing the aim
is primarily ‘financial’. This does not mean that commercial marketers cannot contribute to
achievement of social good.

Applications of Social Marketing:

1. Health promotion campaigns in India, especially in Kerala and AIDS awareness programmes
are largely using social marketing, and social workers are largely working for it. Most of the
social workers are professionally trained for this particular task.

ADVERTISEMENTS:

2. Anti-tobacco campaigns.

3. Anti-drug campaigns.

4. Anti-pollution campaigns.

ADVERTISEMENTS:

5. Road safety campaigns.

6. Anti-dowry campaigns.

7. Protection of girl child campaign.

8. Campaign against the use of plastic bags.

9. Green marketing campaign.

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Social marketing applies a customer-oriented approach, and uses the concepts and tools used by
commercial marketers in pursuit of social goals such as anti-smoking campaigns or fund raising
for NGOs.

Advantages of Social Marketing:

Social marketing—a new marketing tool—can be a great asset if used properly. The beneficial
effects of social marketing for a business can be tremendous, but one must remember that it must
be used in the most efficient possible way.

Social marketing allows businesses and web sites to gain popularity over the Internet by using
different types of social media available, such as blogs, video and photo sharing sites, social
networking sites and social bookmarking web sites.

There are six distinct advantages of social marketing that make it a vital tool to any
marketing campaign:
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1. Promotes consumption of socially desirable products.

2. Promotes health consciousness in people and helps them adopt a healthier lifestyle.

3. It helps in green marketing initiatives.

4. It helps to eradicate social evils that affect the society and quality of life.

5. Social marketing is one of the cheapest ways of marketing.

6. One of the best advantages of social marketing is that anyone can take advantage of it, even
from their own home.

Green Marketing: Meaning and Importance of Green Marketing

Meaning

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Here, term ‘green’ is indicative of purity. Green means pure in quality and fair or just in dealing.
For example, green advertising means advertising without adverse impact on society. Green
message means matured and neutral facts, free from exaggeration or ambiguity. Green marketing
is highly debated topic for lay people to highly professional groups.

Concept of green marketing concerns with protection of ecological environment. Modern

marketing has created a lot of problems. Growth in marketing activities resulted into rapid
economic growth, mass production with the use of advanced technology, comfortable and
luxurious life, style, severe competition, use of unhealthy marketing tactics and techniques to
attract customers, exaggeration in advertising, liberalization and globalization, creation of
multinational companies, retailing and distribution by giant MNCs, etc., created many problems.

Departmental stores, specialty stores, and shopping malls are flooded with useful as well as
useless products. These all factors have threatened welfare of people and ecological balance as
well. Particularly, giant factories have become the source of different pollutions. Production,
consumption and disposal of many products affect environment adversely.

Excessive pollution has provoked the Nature and the Nature starts behaving in unnatural ways
(in form of global warming v/s global cooling, heavy rains v/s draught, and other natural
calamities like frequent earthquakes and tsunami, cyclones, epidemics, and so forth). Economic
growth via production and consumption threatens peaceful life of human being on the earth.
Green marketing is an attempt to protect consumer welfare and environment (the nature) through
production, consumption, and disposal of eco-friendly products.

Basically, green marketing concerns with three aspects:

1. Promotion of production and consummation of pure/quality products,

2. Fair and just dealing with customers and society, and

3. Protection of ecological environment.

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Global ecological imbalance and global warming (also global cooling) have called upon
environmentalists, scientists, social organisations, and alert common men to initiate the concrete
efforts to stop further deterioration of ecological environment. The World Bank, the SAARC, the
UNO, the WHO, and other globally influential organisations have started their efforts to promote
and practice green marketing. The world environment summit at Copenhagen (2009) is the mega
event that shows the seriousness of ecological imbalance.

To increase awareness, 5th June is declared as the World Environment Day. Green marketing
emphases on protection of long-term welfare of consumers and society by production and use of
pure, useful, and high quality products without any adverse effect on the environment. Mass
media have started their campaign for protecting the earth from further deterioration. Worldwide
efforts are made to conserve natural water resources.
Thus, green marketing is a marketing philosophy that promotes production and selling of pure
(eco-friendly) products with protection of ecological balance. Green marketing involves multiple
activities. Green Marketing encourages production of pure products by pure technology,
conservation of energy, preservation of environment, minimum use of natural resources, and
more use of natural foods instead of processed foods. Efforts of people, social organisations,
firms, and governments in this regard can be said as green marketing efforts.

Green marketing raises the voice against production, consumption, and/or disposal of such
products that anyway harm consumers, the society, and the environment. It is necessary that
businessmen and users should refrain from harmful products.

Impacts or Importance of Green Marketing:

Green marketing affects positively the health of people and the ecological environment. People
are aware of pure products and pure methods of producing, using, and disposing the products. It
encourages integrated efforts for purity in production and consumption as well.

We can witness following impacts of green marketing:

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1. Now, people are insisting pure products – edible items, fruits, and vegetables based on organic
farming. The number of people seeking vegetarian food is on rise.

2. Reducing use of plastics and plastic-based products.

3. Increased consumption of herbal products instead of processed products.

4. Recommending use of leaves instead of plastic pieces; jute and cloth bags instead of plastic
carrying bags.

5. Increasing use of bio-fertilizers (made of agro-wastes and wormy-composed) instead of

chemical fertilizers (i.e. organic farming), and minimum use of pesticides.

6. Worldwide efforts to recycle wastes of consumer and industrial products.

7. Increased use of herbal medicines, natural therapy, and Yoga.

8. Strict provisions to protect forests, flora and fauna, protection of the rivers, lakes and seas
from pollutions.

9. Global restrictions on production and use of harmful weapons, atomic tests, etc. Various
organisations of several countries have formulated provisions for protecting ecological balance.

10. More emphasis on social and environmental accountability of producers.

11. Imposing strict norms for pollution control. Consideration of pollution control efforts and
eco-technology in awarding IS), ISO 9000, or ISO 14000 certificates and other awards.

12. Declaration of 5th June as the World Environment Day.

13. Strict legal provisions for restricting duplication or adulteration.

14. Establishing several national and international agencies to monitor efforts and activities of
business firms in relation pollution control and production of eco-friendly products.

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International Marketing: Its Features and Need

“International marketing is multinational process of planning and executing the conception,

pricing, promotion, and distribution of ideas, goods, and services to create exchange that satisfy
individual and organisational objectives.”
Availability of the advanced communication and transportation facilities has reduced the
physical distance among the nations of the world, and has made the world as a global village.
Countries of the world are nearing to participate in the global market opportunities. Customers’
needs and wants are not limited to the products produced and marketed within the boundary of
country. Today’s buyers can access goods or services produced and marketed by the foreign
companies. For example, Sony TV, Gucci purses, Coca-Cola, Rayban Glasses, Toyota and Ford
vehicles, Arrow shirts, Levy’s Jeans, Oxford’s books, McDonald’s Fast Food, and many other
products of foreign companies are easily available anywhere.

Similarly, producers’ products are not meant for domestic market only. Development of
computer network (Internet), e-commerce, e-business, network marketing, rapid means of
transportation and other similar advancements have made it possible to access or avail products
of any company throughout the world.

All components of business have acquired the global status, i.e., global market, global demand,
and global supply. Cultural diversities tend to reduce considerably. Customers have become
cosmopolitan. Nowadays, to export or import is not as difficult as it was. Instead of restricting,
most of nations encourage international trade/marketing. (International, multinational,
transnational arid global marketing are used interchangeably).

Export Management and International Marketing:

Export management and international marketing are closely related but are different. Export
management only involves managing international trade from the host (exporting) country to the
guest (importing) country. It is limited to managing of flow of goods or services. While
international marketing is comprehensive and integrated term that also covers exporting
products. In brief, it can be said that export management is a part of international marketing

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management. Export management more closely related to selling products in the international
market.

It is similar to international trade. International marketing deals with identifying needs and wants
of international (customers) market, producing products to satisfy those needs and wants, and
adopting the most appropriate way to price, promote and distribute for the product to satisfy
those needs and wants.

Modern marketing doesn’t involve only selling or distributing, but also include production,
finance, and personnel activities. Further, post-sales activities are also equally crucial. However,
management practitioners and experts use both terms loosely and treat, more or less, as the
similar. The conceptual controversy has a little relevance to the real practice.
Definitions:
(Most of the writers have defined international marketing similar as export management.
Virtually, both are different).

ADVERTISEMENTS:

Let’s examine some definitions:

1. The American Marketing Association defines the term: “International marketing is
multinational process of planning and executing the conception, pricing, promotion, and
distribution of ideas, goods, and services to create exchange that satisfy individual and
organisational objectives.”

(Only the word ‘international’ has been added to the definition adopted by the AMA. The word
implies that marketing activities are undertaken in several countries and such activities should
somehow be coordinated across nations)

2. We can define the term as: International marketing means to produce products (goods and
services) for the foreign customers and to make necessary arrangement to supply them.

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3. International marketing concerns with marketing products in foreign counties. In this
reference, we can define it as: Marketing activities across the border can be said as international
marketing. Marketing activities among the countries of the world can be turned as international
marketing.

4. Finally, it can be said: International marketing is the marketing for the customers of other
countries. It involves designing marketing programme (4P’s) to arrive at desired exchange with
foreign customers that satisfies their needs and wants.

We can identify following simple features of international marketing:

1. Marketing activities are undertaken across the borders.

2. It is directed to facilitate exchange between the firm and the customers of foreign countries.

3. It is aimed at satisfying needs of international/global customers.

4. International marketing decisions are taken with reference to the global business environment.

5. It involves two or more nations.

6. Tailor-made marketing mix is necessary for each of the nations.

7. It is more complex and, hence, difficult.

8. Role of international trade agencies seem very critical in marketing products in other
countries.

9. It offers attractive opportunities along with challenges and threats.

10. All other characteristics of modern marketing are also applicable to international marketing,
etc.

Need and Importance:

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In relation to the need or importance of international marketing, views of Philip Kotler are worth
noted. According to him, two forces essentiality the international marketing are pull forces and
push forces. Push forces lead to force the nation to sell its goods and services in other nations.

The push forces include lower national income, low per capita income, low domestic demand,
unfavourable approach of government, high rates of tax and duties, government force to export
to earn foreign exchange, tough local market, etc. These forces force the marketer to opt for
international market.

Another set of forces is pull forces. The pull forces pull (attract) businessmen to sell their
products in the foreign market to exploits attractive opportunities in the foreign countries. To
take benefits of more profitable opportunities, they are pulled to business in other nations. The
variable lead to international market may fall either in pull forces or push forces or both.

Let’s have brief explanation of several benefits available due to international marketing:
1. It ensures survival for a company and a country.

2. Nations can get benefits of division of work and specialization.

3. It also helps in balancing unequal distribution of natural resources.

4. Extending product life cycle by selling products in other nations.

5. It is important for controlling inflation and achieving price moderation.

6. Balancing demand and supply.

7. Promotion of invention and innovation globally.

8. Companies can take benefits of taxes and duties.

9. Technological Transmission among countries of the world is easily possible.

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10. International marketing can improve standard of living of people.

11. Growth of international marketing results into social and cultural development.

12. Worldwide peace is possible due to interdependency among countries of the world

13. Global employment opportunities can help ease unemployment problems.

14. Growth of overseas market leads to global prosperity.

Forces/Variable Leading to the Need of International Marketing:

The world has become the global market. The opportunities emerging in any nation are not
enjoyed by the nation only. Other nations of the world can take benefits of them. Due to global
thinking, liberal dealings with others, positive attitudes toward privatization, available of
necessary guidelines, facilities, and encouragement have ultimately resulted in growth of
international marketing.

Main forces led to need of international marketing are:

1. Unequal distribution of natural resources

2. Specialization and need for marketing surplus

3. Craze for global political empowerment

4. Rapid means of communication and transportation

5. Liberalization

6. Globalization or global thinking

7. Trend for privatization

8. Improved understanding and cooperation among nations for mutual benefits

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9. Satisfactory functioning of several international organisations or agencies such as International
Monetary Fund (IMF), World Bank, United Nations Organisation (UNO), UN Security Council,
etc.

10. Growth and Development of Multinational Companies (MNCs)

11. Emergence of global marketing opportunities

12. Technological advancement and transfer of technology.

Ethical Issues in Marketing

Ethical issues in marketing arise from the conflicts and lack of agreement on particular issues.
Parties involved in marketing transactions have a set of expectations about how the business
relationships will take shape and how various transactions need to be conducted. Each
marketing concept has its own ethical issues, which we will discuss in this chapter.

Emerging Ethical Problems in Market Research

Market research has experienced a resurgence with the widespread use of the Internet and the
popularity of social networking. It is easier than ever before for companies to connect directly
with customers and collect individual information that goes into a computer database to be
matched with other pieces of data collected during unrelated transactions.
The way a company conducts its market research these days can have serious ethical
repercussions, affecting the lives of consumers in ways that have yet to be fully understood.
Further, companies can be faced with a public backlash if their market research practices are
perceived as unethical.

Grouping the Market Audience

Unethical practices in marketing can result in grouping the audience into various
segments. Selective marketing may be used to discourage the demand arising from these so-
called undesirable market segments or to disenfranchise them totally.
Examples of unethical market exclusion may include the industry attitudes towards the gay,
ethnic minority, and plus-size groups.

Ethics in Advertising and Promotion

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In the early days of existence of corporations, especially during 1940s and 1950s, tobacco was
advertised as a substance that promotes health. Of late, an advertiser who does not meet the
ethical standards is considered an offender against morality by the law.
 Sexuality is a major point of discussion when ethical issues in advertising content are
considered. Violence is also an important ethical issue in advertising, especially where
children should not be affected by the content.
 Some select types of advertising may strongly offend some groups of people even when
they are of strong interest to others. Female hygiene products as well as haemorrhoid
and constipation medication are good examples. The advertisements of condoms are
important in the interest of AIDS-prevention, but are sometimes seen by some as a
method of promoting promiscuity that is undesirable and strongly condemned in various
societies.
 A negative advertising policy lets the advertiser highlight various disadvantages of the
competitors’ products rather than showing the inherent advantages of their own products
or services. Such policies are rampant in political advertising.

Delivery Channels
Direct marketing is one of the most controversial methods of advertising channels, especially
when the approaches included are unsolicited.
Some common examples include TV and Telephonic commercials and the direct mail.
Electronic spam and telemarketing also push the limits of ethical standards and legality in a
strong manner.
Example − Shills and astroturfers are the best examples of ways for delivering a marketing
message under the guise of independent product reviews and endorsements, or creating
supposedly independent watchdog or review organizations. Fake reviews can be published on
Amazon. Shills are primarily for message-delivery, but they can also be used to drive up prices
in auctions, such as EBay auctions.

Deceptive Marketing Policies and Ethics

Deceptive marketing policies are not contained in a specific limit or to one target market, and it
can sometimes go unseen by the public. There are numerous methods of deceptive marketing.
It can be presented to consumers in various forms; one of the methods is one that is
accomplished via the use of humor. Humor offers an escape or relief from various types of
human constraints, and some advertisers may take the advantage of this by applying deceptive
advertising methods for a product that can potentially harm or alleviate the constraints using
humor.

Anti-Competitive Practices
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There are various methods that are anti-competitive. For example, bait and switch is a type of
fraud where customers are "baited" through the advertisements for some products or services
that have a low price; however, the customers find in reality that the advertised good is
unavailable and they are "switched" towards a product that is costlier and was not intended in
the advertisements.
Another type of anti-competitive policy is planned obsolescence. It is a method of designing a
particular product having a limited useful life. It will become non-functional or out of fashion
after a certain period and thereby lets the consumer to purchase another product again.

A pyramid scheme is also an anti-competitive process. It is a non-sustainable business model

that promises the participants payment or services, mainly for enrolling other people into the
scheme; it does not supply any real investment or sell products or services to the public.
This business practice demands the initial investor or the "captain" to enroll other people for a
fee to them who again will further enroll more people in order to be paid by the company.

Pricing Ethics
There are various forms of unethical business practices related to pricing the products and
services.
Bid rigging is a type of fraud in which a commercial contract is promised to one party,
however, for the sake of appearance several other parties also present a bid.
Predatory pricing is the practice of sale of a product or service at a negligible price, intending
to throw competitors out of the market, or to create barriers to entry.

Customer Value Concept

Introduction
We are living in a world that is most unstable and dynamic. World is not only changing but the
rate of change is accelerating. We are experiencing change in our daily life and in marketplace
too. Customer needs, wants, expectations are changing more rapidly; customers are increasingly
demanding better quality and reliability in products and services; new products and services are
coming to market more quickly, competition is getting more intense and global; and technology
is changing rapidly.

Businesses are operating in an uncertain, highly competitive, and highly complex environment.
Not only small but big players are also facing difficulties and challenges. Top companies are

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loosing market share and new companies are taking their place. In cell-phone industry Nokia was
the market leader, but it is not so today, Samsung took its place.

Today, the leading edge companies are giving importance to customer satisfaction, loyalty, and
value. They are providing higher customer value to attract new customers and retain existing
customers and it leads to their long term profitability and growth.

Definition of Customer Value

According to Woodruff (1997, p. 142) - “Customer value is a customer’s perceived preference
for and evaluation of those product attributes, attribute performances, and consequences arising
from use that facilitate (or block) achieving the customer’s goals and purposes in use situations".

Customer value is the difference between the values the customer gains from owning and using a
product and the cost of obtaining the product.

Customer value is the difference between total customer value and total customer cost. Total
customer value is the sum of product value, service value, personnel value, and image value.
Total customer cost is the sum of monetary cost, time cost, physics cost, and energy cost.

Types of Value
Functional Value
It is concerned with the extent to which a product is useful, has desired characteristics, and
performs a desired function.
 Appropriate features and characteristics - quality, aesthetics, creativity, and customization.
 Appropriate performance - performance quality, reliability, and service-support outcomes.
 Appropriate outcomes - effectiveness, operational benefits, and environmental benefits.
For example - Apple focus mainly on creating appropriate features and attributes. Ford focus on
performance, and Pfizer focus on appropriate outcomes and consequences.

Experimental Value
It is concerned with the extent to which a product creates appropriate feelings, experiences and
emotions for the customer. For example - most restaurants focus on sensory values
like aesthetics, aromas, ambiance, feel or tone. Organizations in travel or entertainment focus on
creating emotional values like - pleasure, fun, excitement adventure, or humour.

Symbolic or Expressive Value

It is concerned with the extent to which customers associate psychological meaning to a product.
Some products appeal to customer's self-concept and self-worth. Branded products like BMW,
Rolex, etc are purchased because of their status, prestige, and image.

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