1、Gaining competitive advantage through customer value oriented managementAnexecutivesummaryformanagersGainingcompetitiveadvantageandexecutivereaderscanbefoundatthethroughcustomervalueorientedendofthisarticlemanagementFrankHuberAssistantProfessorofMarketing,DepartmentofMarketing,UniversityofMainz,Main
2、z,GermanyAndreasHerrmannProfessorofMarketing,DepartmentofMarketing,UniversityofMainz,Mainz,GermanyRobertE.MorganChairandProfessorofMarketingandStrategicManagement,SchoolofManagementandBusiness,UniversityofWales,Aberystwyth,Wales,UKKeywordsConsumerbehaviour,Perception,Productattributes,Value,Competit
3、iveadvantageAbstractWithinthecustomervalueliteraturethereisalacunaoftheoreticalframeworksandmodelsthatunderlieconsumersoverallproductvaluation.Thispaperaddressesthislimitationandpresentsamodelintegratingconsumervalues,productbenefits,andvariouscostsofconsumption.Intheproposedmodel,benefitsandcostsar
4、edefinedintermsofconsumersperceptionsintheactivitiesofacquisition,consumption,andmaintenance,aswellasconsumersexpectationofvaluesatisfactionbeforebuying.IntroductionEffectivestrategyDevelopinganeffectivestrategyrequiresthatexecutivesandcorporateleadershavethestrategicinsightandcomprehensiveunderstan
5、dingoftheproduct-marketdomain(s)theyoperatewithin.Thisunderstandingmustbesourcednottothefirmsown(internallyderived)perspectivebutratherfromthatofitscustomers.Recall,forexample,thatXeroxviewsitselfasadocumentprocessingcompany,whereasSchlumbergerprovidesinformationtothepetroleumindustry.Strategicdecis
6、ionsarealsomadeastothefuturedirectionofthecompanyandthemeansofincreasingthelevelofcustomerorientationexhibited.Moststrategistsagreethatcreatingcustomervalueisfundamentaltoincreasedcustomerorientation(SlaterandNarver,1998).Indeed,creatingsuperiorcustomervalueisanecessarypreconditionforsecuringanichei
7、nacompetitiveenvironment,nottomentionaleadershippositioninthemarket(Day,1990).AccordingtoPorter(1980),acompanycanfollowtwogenericroutestocompeteinamarket:differentiationorlow-cost.Day(1990,p.163)arguesthatbothapproachesmaintainthesameobjective,tocreatesuperiorcustomervalue,because:Regardlessofwhicho
8、ftheseroutesisemphasized,theeffortwillfailunlesssignificantcustomervalueiscreated.Day(1990,p.149/research_registersThecurrentissueandfulltextarchiveofthisjournalisavailableat/.emerald-library/ftJOURNALOFCONSUMERMARKETING,VOL.18NO.12JOURNALOFCONSUMERMARKETING,VOL.18NO.1200143Theoperationalizationofth
9、ecutomervaluesconceptMeans-endtheorypositsthatlinkagesbetweenproductattributes,consequencesproducedthroughconsumption,andpersonalvaluesofconsumersunderlietheirdecision-makingprocesses(Gutman,1991).Meansareproductsorservices,andendsarepersonalvaluesconsideredimportanttoconsumers.Means-endtheoryseekst
10、oexplainhowanindividualschoiceofaproductorserviceenableshimorhertoachievehisorherdesiredendstates.Suchaframeworkconsistsofelementsthatrepresentthemajorconsumerprocessesthatlinkpersonalvaluestobehavior.Twoassumptionsunderliethemodel:(1)allconsumeractionshaveconsequences;and(2001consumerhasadequatefin
11、ancialcapacity,onemustnotequallyassumethatapurchasewillfollow.Thesecasesimplythatnormativepointsofviewarealsonecessaryinconsumerchoiceresearch.Fromaneconomicsperspective,consumersmayapplycost-benefitevaluationtoapurchasedecision,atleastwhenthecostsareconsideredsignificant(OlshavskyandGranbois,1979).
12、Therefore,withrespecttoasoundcustomervalueanalysisforaconsumermarket,boththedescriptiveandnormativeaspectsareessential(SarenandTzokas,1998).Thecurrentpaperproposesacomprehensivemodelofcustomervalueforconsumermarkets,whichintegratesbothviewpointsuponconsumerbehavior,includingconsumervaluesexpectation
13、beforepurchase,customervalueevaluationatthetimeofbuying,andvalueactualisationinconsumption(Holbrook,1994).ThemodelAccordingtosocialpsychologists,anindividualsperceptionofobjects,andeventsisinfluencedbyhisorhercognitivetraits(e.g.personalityorattitude),theiremotionalpredisposition,andtheirdemographic
14、s.CustomercharacteristicsAsindicatedinFigure1,thesefactorsofcustomercharacteristicsformthebackgroundofthecustomersperception.Astheperceivedbenefitsaremanifestmoreclearlythanpersonalvalues,thebuyersevaluationofaproductpurchasebeginsatthispoint.Thematchingprocessontheconsumervalue,benefit,andattribute
15、levelcanbedescribedasanexperientialjudgementofoutcomescomparedtoasetofsubjectivestandardsresultinginasenseoffulfilment,includingover-(whentheperceivedvalueexceedstheexpectedvalue)orunder-fulfilment(whentheexpectedvalueexceedstheperceivedvalue).Animportantdistinctionshouldbemadehereinthatproductbenef
16、itsbasedonconsumptionoruseoftheproductarenotthesolebenefitsconsumersrealize.Rather,theymayalsoderivebenefitsofapurchasefromthebuyingactivitiesperse,otherconsumptionsupportingfeaturesaswellasfromtherecyclingoftheproduct.TreacyandWiersema(1993)claimthattodayscustomershave,anexpandedconceptofvalue(purc
17、hasebenefits)thatincludesconvenienceofpurchase,(and)after-saleservice(p.l84)inadditiontothetraditionalproductbenefits.PerceivedcustomervalueToevaluatetheperceivedcustomervalueofaproduct,thecostsofobtainingtheperceivedbenefitsareusuallythemajorconcernofbuyers,sinceconsumersmayapplyprinciplesofcosts-b
18、enefitstoevaluateapurchase(Zeithaml,1988).Themodelproposesthattherelevantcostsofapurchaseconsideredbyconsumersincludethefollowing:monetarycosts;timecosts;searchcosts;learningcosts;emotionalcosts;and,cognitiveandphysicaleffortcoupledwithfinancial,social,andpsychologicalrisks.Furthermore,everycategory
19、ofthesecostsmayplayapartinpurchase,possession,consumption,andmaintenance.Consumersencounterriskswhentheyfacetheuncertaintyorpotentialnegativeconsequencesofconsumeractivities.Forexample,beingcheated,overchargedormisledintobuyinganunnecessaryproductorpossessingorusingcertainproducts,suchasunconvention
20、alclothes,mayincursocialcosts.Maintenancerisksincludebeingoverchargedforsuppliesandorsufferingthepossibilitythattheywillbediscontinued.Nevertheless,allofthesecosts,likethebenefits,arealsosubjecttoconsumerperceptions.Themodelsuggeststhatcustomervalueisaconsequenceofsubjectiveevaluationwhichinturnresu
21、ltsfromthesummingofthevariouselementscontributingtotheperceivedfulfilmentofthevalue,benefit,andattributelevelandperceivedcosts,takingintoaccountsubjectiveweightingfactors.JOURNALOFCONSUMERMARKETING,VOL.18NO.12001Figure1.AmodelofconsumervaluesandcustomervalueThusfar,inthecurrentmodelofcustomervalue,b
22、enefits,andcostsaredefinedintermsofconsumerperceptionsintheactivitiesofacquisition,consumption,andmaintenance,aswellasconsumerexpectationsofpersonalvaluessatisfactionbeforepurchase.Thatis,thisconsumptionbehaviorapproachisbothholisticandanalysis-oriented,advancingbeyondtraditionalcustomer-orientedcon
23、cepts,whichusuallyfocusonthebuyerseconomicevaluationatpurchase.Asemphasizedinthemodel,theimportanceofbenefitsandcostsvariesamongindividualsduetotheirpersonalcharacteristicsandvaluesystem.PhenomenaThesephenomenahaveledinbrandandsalesmanagementpracticetobenefitorcostsegmentationtheprocessofdividingcon
24、sumersintohomogeneoussubgroupsorsegmentsbasedupontheirinterestinparticularbenefits(Porter,1996).Thebenefitsmostimportanttotargetcustomersareafundamentalissueinbrandandsalesstrategies,suchasproductdifferentiationandpositioning.Furthermore,asthebenefitaconsumerwantstoreceiverepresentsapartofhisorherva
25、luesystem,themanagershouldnotoverlooktherelevanceoftheconsumersabstractmethodofstructuringhisorherbehavior.Thismeansnothingelsethanexpandingthebrandandsalesintovaluesandperceivedcustomervaluemanagement.However,companieshavetogoonecrucialstepfurthertoobtainamoreaccurateandcompleteprofileofthecustomer
26、inrespectofhisorhercharacteristics,thedirectandindirect(pre-)economicsignificanceofthecustomerhastobecalculated.Inotherwords,basedupontheidentifiedpersonalvaluesandperceivedcustomervalue,itmakessensetocomputeallmonetaryandnon-monetarylossessustainedbyasupplier,ifheorshefailstoretainacertaincustomer.
27、However,customermigrationofthiskinddoesnotonlyresultinlossesinsales,turnover,andprofitability:itismoreappropriatealsotoincludeinthisconsideration,pre-economicvaluecomponentssuchasthereferencepotential,cross-sellingpotential,andinformationpotentialofcustomers.AbsolutesalespotentialWithintheframeworko
28、ftheanalysisofabsolutesalespotential,customersareassessedonthebasisofsales,whichhavebeentransactedoveracertainperiod,orattainablefuturesalesand,dependinguponhowpromisingtheyappear,classifiedasA,BorCcustomers.Differentiatedapproachesalsoincludeinthesales-relatedcustomerassessmentthelifecyclephaseinwh
29、ichtopositionthecustomerrelationship.Thewidelyheldopinionthathighcostsmeanhighprofitshaslongbeendiscredited.Insteadofthis,ithasbeenpossibletoobservedispersionofprofitsoveragenerallywidespectrum.Inthiscontexttheabsoluteamountofthecustomercontributionmarginisgreatlydependentonthetotalvolumeofthecustom
30、erspurchasesprofitabilityismostcertainlynot.Theimmediateneedresultingfromthisistoidentifydifferencesincustomervalueaspartofanaccountingexercisebasedontheincomegeneratedbyanindividualcustomer.Whatisimportantinthiscontextisthattherevenuegeneratedbyeachindividualcustomerandthecostsincurredbythiscustome
31、rareallocatedonanindividualbasis.Anaccountingsystemsetupinthiswayisalsothebasisforcalculatingthemonetarycustomerprofitabilitypotential.Itstatesthemonetarycustomerprofitabilitypotential,whichcanbequantifiedwiththehelpofcustomerprofitabilityaccounting,andindicatestowhatextentanindividualcustomerrepres
32、entsaprofitorlossforthecompany.ContributionThecontributionmadebyeverycustomertotheprofitoveragivenperiodcanbedeterminedbycalculatingthecustomercontributionmargin(customerprofitabilitycalculationreferredtoagivenperiod).ByallocatingJOURNALOFCONSUMERMARKETING,VOL.18NO.12001ProductdesignprocessInadditio
33、n,thedemand-orientedpartofthemodel,whereweidentifyvaluesandbenefitsatahighlevelofabstractioncouldbethestartingpointforarevolutionaryproductdesignprocess(Porter,1996).Whencaptured,acustomersegmentscurrentpersonalvaluesareprojectedforwardintime.Thepersonalvaluessegmentationschemeprovidesinsightintothe
34、futurebecausethesevaluesrepresentcustomersenduringbeliefs(Johnson,1998).Thisisnottosaythatcustomersvaluesarenecessarilystable.Twoothersourcesofinformationmustbeintegratedintothevalueprojectionprocess.Customervaluesvarysystematicallywithageandvalueprojectionmustalsotakeintoconsiderationsocietal,cultu
35、ralorotherenvironmentalvaluechanges(Parasuraman,1997).Thisintegrationofcurrenttrendsprovidesapictureofwhatconsumersarelikelytodemandinthefutureandwhatkindofproductstheymaywishtohave.Concerningthesupply-sideofthemodel,customerorientationisnotonlyawordbutaphilosophyandcompanieshavetoorganizetheirinter
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