Value for Customers and Valuing Customers

What are the different marketing eras?

Production-oriented era
- Firms believed a good product will sell itself
Sales-oriented era
- Firms focused on sales
Market-oriented era
- Focus on what customers wanted
Value-based era
- Maintains market orientation with additional focus on giving greater value than the competition

What is the customer value formula?

-Value = Benefits - Price
Benefit:
Functional
- The product does the job
Psychological
- Nike shoes provide social status
Economic
- Walmart offering branded products at a low price
Price:
Monetary
Dollar amount
Perceived risk
Performance Risk
Financial Risk
Social Risk
Physiological Risk
Psychological Risk
Inconvenience

What is Maslows Hierarchy of Needs

Physiological Needs
- Hunger
- Thirst
Safety Needs
- Security
- Protection
Social Needs
- Sense of belonging
- Love
Esteem Needs
- Self-Esteem
- Recognition
Self-Actualization Needs
- Self-development and realization

What is perceptual customer value?

Focus Groups
- 5 - 10 customers have a discussion with a moderator about their perceptions of a product or service
Direct Survey Questions
- Customers agree to complete a survey that describes one or more potential product offerings
Importance Ratings
- Respondents rate their importance of specific attributes towards a product offering

What is Behavioral Customer Value?

Choice Models
- Using past behavior to estimate the value of product features that might explain actual behaviour
Data Mining
- Organizations keep extensive records of customer purchases
- Analyze this information to product segments according to customer profitability etc.

What is the Customer Lifetime Value Formula?

- The lifetime value of a customer is the total profit a firm can expect to earn from that customer during the time the firms maintains a relationship with the customer
Where:
R is the revenue from the customer
C is the cost to acquire or serve the customer
D = 1/(1+r) where r is the discount rate and n is anticipated lifetime of the customer

What is CLV with Acquisition Cost

Where:
A is the acquisition cost
P is the retention rate