Gaining competitive advantage through customer value oriented management

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.1492)proposesthattheconceptofcustomervaluecanbeexpressedintheformofanequation:theperceivedcustomervaluerepresentsinthisequationthedifferencebetweencustomersperceivedbenefitsandcustomersperceivedcosts.Althoug

9、hDays(1990)interpretationofcustomervalueisintuitivelysound,somedetailsregardingTheresearchregisterforthisjournalisavailableat/.mcbup4/research_registersThecurrentissueandfulltextarchiveofthisjournalisavailableat/.emerald-library/ftJOURNALOFCONSUMERMARKETING,VOL.18NO.12001,pp.41-53,#MCBUNIVERSITYPRES

10、S,0736-376141consumersremainunclear.Forexample,theprocessbywhichconsumersperceiveproductbenefitsisnebulous:Day(1990)particularlyaddressesproductvaluationbyindustrialconsumersindetail,butthisisonlyinprincipleapartofamuchmorecomplexprocessofproductvaluationbyconsumers.However,atheoreticalframework,whi

11、chunderliestheconsumersoverallproductvaluation,isabsentfromtheliterature.Suchaframeworkshouldaddresstheissuesofhowconsumersperceivethebenefitsandcostsofproducts(evaluationprocess),aswellaswhatpossiblebenefitsandcostsconsumersmayperceivefromproductsinthemarket(valuedrivers).Thecurrentpaperattemptstor

12、econcilethesegaps.Followingpresentationoftheprocessofproductvaluationforconsumers,thepapercontinueswithacomprehensivemodelofcustomervaluemanagementfortheconsumermarketintegratingconsumervalues,productbenefits,andvariouscostsofconsumption.Intheproposedmodelbenefitsandcostsaredefinedintermsofconsumers

13、perceptionsintheactivitiesofacquisition,consumption(orusing),andmaintenance,aswellasconsumersexpectationofpersonalvaluessatisfactionbeforebuying.Furthermorethiscontributionhelpsmanagersofferingatoolboxtobringthemodelintouse.Finally,theimplicationsofconsumptionbehavioranalysisforademandorientedcustom

14、ervaluemanagementarediscussed.AmodelofcustomervalueforconsumermarketsDescribingcustomervaluefromanormativeperspectiveValueTheconceptofvaluehasbeenappliedtomanysettingsinthemanagement,strategy,finance,informationsystems,andmarketingliteratures(WikstromandNormann,1994).Althoughrepletewithincontemporar

15、yresearchandpracticeinthesedisciplines,thevalueconceptismultifacetedandcomplicatedbynumerousinterpretations,biases,andemphases.Forinstance,thederivationsofvariousvaluedimensionshavebeenevidentfromthepointofviewofstrategicvalue(Katz,1993),valueasequaltorevenueminuspurchases(Strassmann,1990),theeconom

16、iccontributionthatvaluemakestoprofitmaximization(BankerandKauffman,1991),valueasmanifestincontinuousqualityimprovementinitiatives(RichardsonandGartner,1999),intrinsicvaluecreatedthroughscientificapproachestoorganization(Meredithetal.,1994)and,mostparticularly,thevalueofcustomerstoanorganization(Blat

17、tbergandDeighton,1996),customervalues(Engeletal.,1990),andtheprinciplesofcustomerperceivedvalue(Zeithaml,1988).Allthesetheoreticalapproachesrequireuniqueperspectivesanddemandspecificappreciationofthevalueconcept(s)inquestion.Forinstance,thelastthreecustomer-basedderivationsofvaluedimensionsareoftenc

18、onfusedwithinthemarketingliteraturebuttheyarebynomeanssynonymous:thevalueofcustomerstoanorganizationconcernsthedirectbenefitsthatanorganizationexperiencesasaresultofcustomersloyaltyandcontinuedpatronage;customervaluesreflectthepersonalvaluesofindividualconsumers;and,thecustomerperceivedvalueapproach

19、centersupontheutilityacustomerreceivesafterpurchasingaproduct.CustomervalueManymarketingstrategistsandindustrial-organization(IO)economistsemphasizethatcreationofsuperiorcustomervalueisakeyelementforcompaniessuccess(Higgins,1998;KordupleskiandLaitamaki,1997;MilgromandRoberts,1995;Porter,1996;Woodruf

20、f,1997;Wyner1996).However,whatismeantbycustomervalue,fromthisviewpoint,isquitedifferentfromthemeaningsoftheconsumervaluesorpersonalvaluesthatwediscussedintheintroduction.Valuetomarketingstrategists42JOURNALOFCONSUMERMARKETING,VOL.18NO.12001meansareturnforsomethinginanexchange.Therefore,themeaningofc

21、ustomervalueisalevelofreturnintheproductbenefitsforacustomerspaymentinapurchaseexchange(NormannandRamirez,1993).Thetotalamountofpaymentsdependsuponthenumberofcustomersandtheturnoverpercustomer.Theliteratureoncompetitivestrategyarguesthatthenumberofcustomerscanbeincreasedbydeliveringmorecustomervalue

22、thanthecompetition(DayandWensley,1988;Gale,1994;Porter,1985;WoodruffandGardial,1996).Therefore,theconceptofcustomervaluehasbynatureanormativeperspective,sinceitisafundamentalconceptunderlyingthecompetitiveanalysisinthefieldofIO,basedoneconomicprinciplesandthecustomerschoiceinthemarket.Theservicemark

23、etingliteraturehasextendedandrefinedthenotionthatcustomervalueisawaytorealizefinancialsuccessbylinkingitnotonlytothenumberofcustomers,butespeciallytotheturnoverpercustomer.Itisarguedthatcompaniesrealizecommercialsuccessthroughthesatisfactionofcustomersbyensuringtheyperceivethevaluetheyexpect(vanRaai

24、jetal.,1998;Zeithamletal.,1990).Inthepreferredsituationthereforetheexpectedvalueissimilartotheperceivedvalue.Creatingmorecustomervaluewhilemaintainingthisbalancewillresultinlong-termcommercialsuccess.Expectedvalueandperceivedvaluearestronglyinterdependentfromthecustomerperspective.AsisnotedbyVosseta

25、l.(1998),severalstudieshavedemonstratedapositiverelationshipbetweenexpectationandperception(Cadotteetal.,1987;GuptaandStewart,1996;Sprengetal.,1996)whichisinlinewiththeconceptofcognitivedissonance(Festinger,1957).Therefore,balancingcustomervalueisasharedinterestofbothcompaniesandcustomers.Describing

26、customervaluesfromadescriptiveinteractiverelationshipperspectiveCustomerperspectiveCustomervalueisatheoreticalconstructthatcapturesthecustomerperspectiveofaproduct.Ithasbeenillustratedthataproducercanusecustomervalueasagoalbydefiningthecustomervalueaselectedgroupofcustomersisintendedtoexpectandperce

27、ive.Sincecustomervaluedealswiththecustomerperspective,thisdoesnotdetractfromthefactthatiteventuallyconcernsasubjectivenotionofanindividualcustomersjudgementofthevalueofaproduct(AndersonandNarus,1998;WoodruffandGardial,1996;Zeithaml,1988).Likeotherauthors,WoodruffandGardial(1996)assertthatthejudgemen

28、tofvalueresultsfromatrade-offinpositiveconsequences(benefits)ordesiredoutcomesandnegativeconsequences(sacrifice)orcosts.Thissubjectiveevaluationtaskoftheindividualisthereasonwhyconsumerbehaviorresearchers,ontheotherhand,generallyrefertothetermcustomervalues.Thewordvaluesrepresentsdesirability,useful

29、nessorimportance(PeterandOlson,1990).Consumerresearchisprimarilyfoundeduponadescriptive-studyperspective,suchasinthefieldsofanthropology,sociologyandpsychology.Therefore,consumervaluesrefertotheimportantpersonalgoalsthatconsumersseek(Wilkie,1990).Furthermore,consumerbehaviorresearchersemphasizethatp

30、eoplecanachievesomeoftheirpersonalvaluesthroughpossessionorconsumptionofproducts.Nonetheless,whatisneededisanapproachthatisabletoidentifyvaluedriversdriverstheconsumerisseeking,whicharethemeanstoreachthepersonalgoalsestablished,thatshouldbefulfilledwhenpurchasingaproduct.Asuitableapproachwhichconnec

31、tsthepossessionorconsumptionofproductsandtheconsumerspersonalvaluesismeans-endtheory,whichhasitsrootsincognitivepsychology.JOURNALOFCONSUMERMARKETING,VOL.18NO.1200143TheoperationalizationofthecutomervaluesconceptMeans-endtheorypositsthatlinkagesbetweenproductattributes,consequencesproducedthroughcon

32、sumption,andpersonalvaluesofconsumersunderlietheirdecision-makingprocesses(Gutman,1991).Meansareproductsorservices,andendsarepersonalvaluesconsideredimportanttoconsumers.Means-endtheoryseekstoexplainhowanindividualschoiceofaproductorserviceenableshimorhertoachievehisorherdesiredendstates.Suchaframew

33、orkconsistsofelementsthatrepresentthemajorconsumerprocessesthatlinkpersonalvaluestobehavior.Twoassumptionsunderliethemodel:(1)allconsumeractionshaveconsequences;and(2)allconsumerslearntoassociateparticularconsequenceswithparticularactionstheymaytake.ConsumptionofproductsConsumersobtainconsequencesfr

34、omtheconsumptionofproductsorservices.Consequencesmaybedesirable(benefits)orundesirabletheymaystemdirectlyfromconsumingortheactofconsumption,oroccurindirectlyatalaterpointintimeorfromothersreactionstoonesconsumptionbehavior.Thecentralaspectofthetheoryisthatconsumerschooseactionsthatproducedesiredcons

35、equencesandminimizeundesiredconsequences(PeterandOlson,1990).Personalvaluesarebeliefspeoplehaveaboutimportantaspectsofthemselvesandthegoalstowardwhichtheyarestriving.Personalvaluesaretheultimateconsequencesofbehaviorforindividuals,suchasfeelingsofself-esteem,belongingorothervalueorientations(Rokeach

36、,1973).Inthissense,personalvaluesarepartofthecentralcoreofself.Thus,personalvalues,asthepsychologicalcoreofself,areheldtoprovideconsequences(consequencesrefertotheoutcomesaccruingtothepersonfrombehavior,suchasconsumingaproduct)withpositiveornegativevalences.Thatis,personalvaluesdeterminewhichtheindi

37、vidualdesiresasconsequencesandwhichareundesirable.Naturally,giventhatattributesproduceconsequences,onemustconsidertheattributesthatproductsorservicespossess.Therefore,wemustalsobeawareofattribute-consequencerelations.Overall,attribute-consequence-valueinterrelationshipsarethefocusofthistheory.Values

38、providetheoveralldirection,consequencesdeterminetheselectionofspecificbehaviorsinspecificsituations,andattributesconveytheessenceofthetangibleproductorservicethatproducetheconsequences(OlsonandReynolds,1983).Themostrelevantmethodsavailabletoexploretheknowledgestructureoftheconsumerarethe:repertorygr

39、idapproach;ladderinginterview;contentanalysis;and,theladderingmethod(ReynoldsandGutman,1988;GenglerandReynolds,1995).However,inordertoobtainanunderstandingoftheconcreteattributes,whichdeterminethebuyingbehavioroftheconsumer,conjointanalysisisanadequatetechnique(Wittinketal.1994;GreenandSrinivasan,19

40、90).SummaryInsummary,customervaluenormativelyfocusesonabuyersevaluationatthetimeofaproductpurchase,whileconsumervaluesdescriptivelyemphasizeindividualsvaluationofproductconsumptionorpossession.Consumerresearcherswillarguethatconsumersbuyproductsnotforthesakeofitstransactionalvaluebutfortheproductsbe

41、nefitsthatwillsatisfytheirneedsorpersonalvalues.However,inanexchangeenvironment,productbenefitsalonedonotcompletelyexplainconsumersproductchoice.Often,consumersmayfindproductsdesirableyet,inassumingthatthe44JOURNALOFCONSUMERMARKETING,VOL.18NO.12001consumerhasadequatefinancialcapacity,onemustnotequal

42、lyassumethatapurchasewillfollow.Thesecasesimplythatnormativepointsofviewarealsonecessaryinconsumerchoiceresearch.Fromaneconomicsperspective,consumersmayapplycost-benefitevaluationtoapurchasedecision,atleastwhenthecostsareconsideredsignificant(OlshavskyandGranbois,1979).Therefore,withrespecttoasoundc

43、ustomervalueanalysisforaconsumermarket,boththedescriptiveandnormativeaspectsareessential(SarenandTzokas,1998).Thecurrentpaperproposesacomprehensivemodelofcustomervalueforconsumermarkets,whichintegratesbothviewpointsuponconsumerbehavior,includingconsumervaluesexpectationbeforepurchase,customervalueev

44、aluationatthetimeofbuying,andvalueactualisationinconsumption(Holbrook,1994).ThemodelAccordingtosocialpsychologists,anindividualsperceptionofobjects,andeventsisinfluencedbyhisorhercognitivetraits(e.g.personalityorattitude),theiremotionalpredisposition,andtheirdemographics.CustomercharacteristicsAsind

45、icatedinFigure1,thesefactorsofcustomercharacteristicsformthebackgroundofthecustomersperception.Astheperceivedbenefitsaremanifestmoreclearlythanpersonalvalues,thebuyersevaluationofaproductpurchasebeginsatthispoint.Thematchingprocessontheconsumervalue,benefit,andattributelevelcanbedescribedasanexperie

46、ntialjudgementofoutcomescomparedtoasetofsubjectivestandardsresultinginasenseoffulfilment,includingover-(whentheperceivedvalueexceedstheexpectedvalue)orunder-fulfilment(whentheexpectedvalueexceedstheperceivedvalue).Animportantdistinctionshouldbemadehereinthatproductbenefitsbasedonconsumptionoruseofth

47、eproductarenotthesolebenefitsconsumersrealize.Rather,theymayalsoderivebenefitsofapurchasefromthebuyingactivitiesperse,otherconsumptionsupportingfeaturesaswellasfromtherecyclingoftheproduct.TreacyandWiersema(1993)claimthattodayscustomershave,anexpandedconceptofvalue(purchasebenefits)thatincludesconve

48、nienceofpurchase,(and)after-saleservice(p.l84)inadditiontothetraditionalproductbenefits.PerceivedcustomervalueToevaluatetheperceivedcustomervalueofaproduct,thecostsofobtainingtheperceivedbenefitsareusuallythemajorconcernofbuyers,sinceconsumersmayapplyprinciplesofcosts-benefitstoevaluateapurchase(Zei

49、thaml,1988).Themodelproposesthattherelevantcostsofapurchaseconsideredbyconsumersincludethefollowing:monetarycosts;timecosts;searchcosts;learningcosts;emotionalcosts;and,cognitiveandphysicaleffortcoupledwithfinancial,social,andpsychologicalrisks.Furthermore,everycategoryofthesecostsmayplayapartinpurc

50、hase,possession,consumption,andmaintenance.Consumersencounterriskswhentheyfacetheuncertaintyorpotentialnegativeconsequencesofconsumeractivities.Forexample,beingcheated,overchargedormisledintobuyinganunnecessaryproductorpossessingorusingcertainproducts,suchasunconventionalclothes,mayincursocialcosts.

51、Maintenancerisksincludebeingoverchargedforsuppliesandorsufferingthepossibilitythattheywillbediscontinued.Nevertheless,allofthesecosts,likethebenefits,arealsosubjecttoconsumerperceptions.Themodelsuggeststhatcustomervalueisaconsequenceofsubjectiveevaluationwhichinturnresultsfromthesummingofthevariouse

52、lementscontributingtotheperceivedfulfilmentofthevalue,benefit,andattributelevelandperceivedcosts,takingintoaccountsubjectiveweightingfactors.JOURNALOFCONSUMERMARKETING,VOL.18NO.120014546JOURNALOFCONSUMERMARKETING,VOL.18NO.12001Figure1.AmodelofconsumervaluesandcustomervalueThusfar,inthecurrentmodelof

53、customervalue,benefits,andcostsaredefinedintermsofconsumerperceptionsintheactivitiesofacquisition,consumption,andmaintenance,aswellasconsumerexpectationsofpersonalvaluessatisfactionbeforepurchase.Thatis,thisconsumptionbehaviorapproachisbothholisticandanalysis-oriented,advancingbeyondtraditionalcusto

54、mer-orientedconcepts,whichusuallyfocusonthebuyerseconomicevaluationatpurchase.Asemphasizedinthemodel,theimportanceofbenefitsandcostsvariesamongindividualsduetotheirpersonalcharacteristicsandvaluesystem.PhenomenaThesephenomenahaveledinbrandandsalesmanagementpracticetobenefitorcostsegmentationtheproce

55、ssofdividingconsumersintohomogeneoussubgroupsorsegmentsbasedupontheirinterestinparticularbenefits(Porter,1996).Thebenefitsmostimportanttotargetcustomersareafundamentalissueinbrandandsalesstrategies,suchasproductdifferentiationandpositioning.Furthermore,asthebenefitaconsumerwantstoreceiverepresentsap

56、artofhisorhervaluesystem,themanagershouldnotoverlooktherelevanceoftheconsumersabstractmethodofstructuringhisorherbehavior.Thismeansnothingelsethanexpandingthebrandandsalesintovaluesandperceivedcustomervaluemanagement.However,companieshavetogoonecrucialstepfurthertoobtainamoreaccurateandcompleteprofi

57、leofthecustomerinrespectofhisorhercharacteristics,thedirectandindirect(pre-)economicsignificanceofthecustomerhastobecalculated.Inotherwords,basedupontheidentifiedpersonalvaluesandperceivedcustomervalue,itmakessensetocomputeallmonetaryandnon-monetarylossessustainedbyasupplier,ifheorshefailstoretainacertaincustomer.However,customermigrationofthiskinddoesnotonlyresultinlossesinsales,turnover,andprofitability:itismoreappropriatealsotoincludeinthisconsideration,pr