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
Image value
value
Personnel
Personnel value
value Total
Total
customer
customer
Services
Services value
value value
value
Product
Product value
value Customer
Customer
delivered
delivered
Monetary
Monetary cost
cost value
value
Time
Time cost
cost Total
Total
customer
customer
Energy
Energy cost
cost cost
cost
Psychic
Psychic cost
cost

©2000 Prentice Hall

 Satisfaction is a person’s
feelings of pleasure or
disappointment resulting
from comparing a product’s
perceived performance (or
outcome) in relation to his or
her expectations.

©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

Ma
Technology Development

rg in
Procurement

Market-

n
Out- Serv-

rgi
Inbound Opera- ing
bound ice

Ma
Logistics tions and
Logistics
sales

©2000 Prentice Hall Primary Activities

 Levi Strauss’
Value-Delivery Network

Order Order Order Order

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

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

+ + +
Highly
P P1 profitable
r product

o P2
+ Profitable

- -
d product

u P3 Losing
c

-
product

t
s
P4
+High
Mixed-bag Losing
Mixed-bag
product

profit
customer customer
©2000 Prentice Hall customer
 The Profit Triangle

Int
n

er
io

n
at

al
re

op
ec

er
lu

Profit
Profit

ati
Va

on
s
©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