Objectives

 Define value & satisfaction - understand

how to deliver them
 The nature of high-performance
businesses
 How to attract & retain customers
 Improving customer profitability
 Total quality management

©2000 Prentice Hall

 Determinants of Customer
Delivered Value
Image value

Personnel value Total

customer
Services value value
Product value Customer
delivered
Monetary cost value

Time cost Total

customer
Energy cost cost
Psychic cost

©2000 Prentice Hall

 High Performance Business

Set strategies to
satisfy key... Stake-
holders

By improving Processes
critical business...

and
Resources Organization
aligning...

©2000 Prentice Hall

 The Generic Value Chain
Firm infrastructure
Activities
Support

Human resource management

Technology Development

Procurement

Market-
Out- Serv-
Inbound Opera- ing
bound ice
Logistics tions and
Logistics
sales

©2000 Prentice Hall Primary Activities

 Levi Strauss’
Value-Delivery Network

Order Order Order Order

Du Pont Milliken Levi’s Sears Customer
(Fibers) (Fabric) (Apparel) (Retail)

Delivery Delivery Delivery Delivery

Competition is between networks, not companies.

The winner is the company with the better network.
©2000 Prentice Hall
 Satisfied Customers:

 Are loyal longer

 Buy more (new products & upgrades)
 Spread favorable word-of-mouth
 Are more brand loyal (less price
sensitive)
 Offer feedback
 Reduce transaction costs

©2000 Prentice Hall

 Levels of Relationship
Marketing
High Medium Low
margin margin margin
Many Basic or
customers/ Accountable Reactive reactive
distributors

Medium
number of Proactive Accountable Reactive
customers/
distributors

Few
customers/ Partnership Proactive Accountable
distributors

©2000 Prentice Hall

 Customer Development

Suspects

First-time Repeat
Prospects customers customers
Clients Advocates Partners

Disqualified
prospects Inactive or
ex-customers

©2000 Prentice Hall

 Customer/Product
Profitability Analysis
Customers
C1 C2 C3

P
+ + +
Highly
P1 profitable
r

+
product
o P2 Profitable

- -
d product

u
P3 Losing

-
c product

t
s
P4
+High
Mixed-bag
product

Mixed-bag Losing
profit
customer customer
©2000 Prentice Hall customer
 The Profit Triangle

Profit

©2000 Prentice Hall Competitive advantage

 Quality

 Quality is the

#1
totality of
features and
characteristics
of a product or
service that
bear on its
ability to satisfy
stated or
implied needs.

©2000 Prentice Hall

 Review

 Define value & satisfaction - understand

how to deliver them
 The nature of high-performance
businesses
 How to attract & retain customers
 Improving customer profitability
 Total quality management

©2000 Prentice Hall