EIGHT FACETS OF THE VALUE THEORY

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EIGHT FACETS OF THE VALUE THEORY
CULTURE
Organizational Culture
Employee Values
SUPPLIER VALUES
CUSTOMER VALUES
3RD PARTY VALUES
Competitor Values
Owners Values
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Prescription for Customer Accelerated Change
Tools to Leverage the Customers Voice

• WHAT IS OUR VISION?

• WHAT IS OUR CURRENT REALITY ?

• WHERE ARE OUR LEVERAGE POINTS ?

• HOW DO WE OPERATIONALIZE ?

• HOW DO WE SUSTAIN THE CHANGE ?

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VISION

• LONG-TERM
• SOMETHING TO BE PURSUED
• A MOTIVATING STATEMENT
• PROVIDES GUIDANCE/INSPIRATION

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7 TOOLS OF CUSTOMER VALUE ANALYSIS
1. Quality Profile
2. Price Profile
3. Value Map
4. Won-Lost
5. Head-to-Head
6. Key Events
7. What/Who
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CUSTOMER VALUE MAP LUXURY CARS
Higher
1.25
Inferior Customer Value

Lexus LS 400
BMW 5-Series
Relative Price

Lincoln Continental
1.25


Acura Legend
Superior Customer Value
.75
Lower
60
80
100
Relative Performance overall score
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quality Service
Product quality
Price
Innovation
Image
CUSTOMER PERCEIVED VALUE
Customer characteristics
Business environment
LOYALTY
Market share and profitability
Shareholder Value
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THE VALUE MATRIX
Well-Intentioned
Value-Creating
High
Purpose
Adversarial
Bureaucratic
Low
Low
High
Process
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VALUE ENABLERS
PEOPLE
TECHNOLOGY
INFORMATION
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THE FOUR STAGES OF QUALITY
Market Perceived Quality vs Compeitor
Customer Value Managment
Conformance Quality
Customer Satisfaction
Customers
Target Market Performance vs Competitors
Quality/Value in Overall Strategic Framework
Internal Operations
Focus
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WHAT IS QUALITY

• Conformance to Requirements/Zero Defects (Crosby)
• Continuous Improvement/Reducing Variation
  (Deming)
• Fitness for Use (Juran)
• Perceived vs Actual Service Delivery
• Product Performance, Reliability, Durability,
  Serviceability, etc.
• Ease of Use, Low Maintenance Costs,
• WHAT THE CUSTOMER SAYS IT IS

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WHY TOTAL QUALITY IN MARKETING

• SLOW OR NO GROWTH MARKETS
• MORE DEMANDING CUSTOMERS
• MORE INTENSIVE GLOBAL COMPETITORS
• QUALITY PAYS!!!
• (lower product/service failure rates, higher
  quality leads to higher ROI higher quality means
  higher customer retention)

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WHY TOTAL QUALITY EFFORTS OFTEN FAIL

• LACK OF TOP MANAGEMENT SUPPORT
• TOTAL QUALITY PROGRAMS ARE OFTEN MOUNTED AS
  STAND-ALONE PROGRAMS
• (involves a cultural transformation of the entire
  organization quality is everyones
  responsibility, not just a quality department))
• LACK CUSTOMER FOCUS - RUN AS INTERNAL PROGRAMS
• FAILURE TO ADAPT ORGANIZATIONAL STRUCTURE TO
  ACCOMMODATE TOTAL QUALITY INITIATIVES

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(CONT.)

• TOO AMBITIOUS - TRY TO DO TOO MUCH, TOO QUICKLY
• NOT A PROGRAM-of-the-MONTH , RATHER A
  BUSINESS-LEVEL STRATEGY
• REQUIRES BUY-IN ON THE PART OF EMPLOYEES
• NEEDS TO BE PROPERLY SOLD INTERNALLY (excuse for
  downsizing?)

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The House of Quality
Mgt. System
TQM
Social System
Technical System
Customer Satisfaction
Continuous Improvement
Speaking with Facts
Respect for People
Strategy Management
Individual Task Mgt.
Project Management
Process Management
Strategic Planning
Operations Planning
Project Planning
Quality Planning
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POTENTIAL PRODUCT
THE FOUR PRODUCT LEVELS
AUGMENTED PRODUCT
EXPECTED PRODUCT
CORE BENEFIT
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STEPS IN PROCESS IMPROVEMENT

• Define the Problem

• Understand the Process

• Measure the Process

• Simplify or Improve the Process

• Evaluate and Monitor Process Improvement ?

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KEYS TO EFFECTIVE IMPLEMENTATION OF TOTAL QUALITY
IN MARKETING

• MEASURE!!! (benchmarking gives you a point of
  departure)
• TRAIN EMPLOYEES ON USE OF TQ TOOLS
• SHARE INFORMATION
• LOOK AT CUSTOMER AND PROCESS TOGETHER
• TIE REWARDS TO QUALITY GOALS

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RELATIVE TOTAL QUALITY
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Contrasting customer satisfaction and customer
value
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QUADRANT ANALYSIS

• Comm. Skills

Weaknesses
Strengths
Critical

• Product Quality

• Customer Service

Over-Emphasized Issues
Monitor Importance

• Ease of Doing Business

Not Important

• Billing Accuracy

Very Poor
Excellent
Perception of Performance
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A Satisfied Customer is Loyal
apostle
100 80 60 40 20
Zone of Affection
Zone of Indifference
Loyalty (Retention)
Zone of Defection
terrorist
1 2 3 4 5
extremely satisfied
somewhat dissatisfied
slightly dissatisfied
satisfied
very satisfied
Satisfaction Measure
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CUSTOMER SATISFACTION MEASUREMENT

• Traditional Customer Satisfaction Measurement
  (CSM) tends to be misleading - according to
  Bain Research, 65-85 percent of customers who
  abandon a business report they were either
  satisfied or very satisfied
• Measuring customer value serves as a better
  indicator of long-term customer commitment and
  loyalty
• Measure not just the foundational (hygiene
  factors) but the leverageable aspects of the
  product/service (ie., satisfiers)
• CSM needs to capture two important items of
  information (1) how important each
  product/service attribute is (2) how well a
  company performs on each product/service
  attribute (use Quadrant Analysis)

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Customer Satisfaction/Revenue Enhancement Model
Revenue Enhancement
Increased Loyalty Positive W.O.M. Customer
Retention
Internal Customer Satisfaction
External Customer Satisfaction
Improved Profitability
Reduced Turnover Increased Productivity
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WHAT IS RELATIONSHIP MARKETING?
The creation and retention of profitable
customers through ongoing collaborative business
and partnering activities between a supplier and
a customer on a one-to-one basis for the purpose
of creating superior customer value
Question What 3 Factors Lead to Overall
Customer Satisfaction in Industrial Buyer-Seller
Relationships?
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Practicing Relationship Marketing

• Share Information with Customer
• Look for opportunities to Add Value
• Respond Quickly to Customer Needs
• Apply Mass Customization
• Involve Customer in product/Service/Process
  Design
• Organize Processes Around Customer
• Track Each Relationship - Est. L.T.V.
• Deliver Differentiated Messages Based on Customer
  Characteristics/Preferences

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Relationship Variables
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Continuum of Relationships
Industry Relationship Bandwidth
Pure Transactional Exchange
Pure Collaborative Exchange
Core Product
Augmented Product
Flaring - Out
Unbundling Strategy
Added Augmentation Strategy
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Stages of Customer Needs
Partnerships with Suppliers
Supplier-Developed Innovations
Customer/Supplier Interaction of the Various Core
Products/Services
Basic Reliable Services Associated with the Core
Products/Sercvices
Core Products and Services That Work
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Transactions vs. Relationships

• SHORT TERM
• LIMITED INTERNAL MARKETING
• MARKETING MIX EMPHASIZED
• BUYER PRICE SENITIVE
• TECHNICAL QUALITY
• FOCUS ON MARKET SHARE
• RESEARCH IS AD-HOC
• LIMITED INTERACTION AMONG FUNCTIONAL AREAS

• LONG TERM
• SUBSTANTIAL INTERNAL MARKETING
• INTERACTIVE MARKETING EMPHASIS
• BUYER LESS PRICE SENSITIVE
• FUNCTIONAL QUALITY
• FOCUS ON SHARE OF CUSTOMER
• RESEARCH IS REAL-TIME
• SUBTANTIAL INTERACTION AMONG FUNCTIONAL
• AREAS

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Key Factors of Successful Customer-Supplier
Relationships
1) Business Expertise (29 )
2) Dedication to Customer (25 )
3) Account Sensitivity and Guidance (23 )
4) Product Performance Quality (10 )
5) Service Dept. Excellence (9 )
6) Confirmation of Capabilities (4)