Designing a Customer Value-driven Strategy

Introduction

The process of understanding customer needs and desires, creating offerings to meet those needs, and building profitable relationships to capture value from customers is at the heart of modern marketing strategies.

Understanding the Marketplace and Customer Needs

Before diving into the marketing process, it's crucial to understand the needs of customers. Customers require products, services, or experiences that they are currently lacking. Wants, on the other hand, are human needs shaped by cultural and social influences. When a need is backed by purchasing power, it becomes a demand. By comprehending customer needs and wants, companies can offer various market offerings, such as products, services, ideas, and experiences, to satisfy these demands.

Customer Value and Satisfaction

Customers have numerous choices in the marketplace to fulfill their needs. They will only purchase products that exceed their expectations in terms of value. If a product falls short of expectations, it may lead to the loss of several potential customers for the firm. The exchange process involves one party offering something and receiving a reward in return. Building relationships is a fundamental aspect of marketing. Companies establish strong relationships with targeted customers by providing them with valuable offerings.

Designing a Customer Value-Driven Strategy

Once we understand our customers, the next step is to decide whom to serve with our products and services. This involves targeting specific market segments and creating profitable relationships. Selecting customers to serve involves dividing the market into segments, leading to the target market. Value proposition is the process by which a firm differentiates and positions its product from competitors. It is a promise to deliver benefits to satisfy consumer needs.

Marketing Management Orientation

Management decides on market strategies to serve the target market and build profitable relationships. The company has five primary strategies: Production, Product, Selling, Marketing, and Social Marketing Concept. The Production concept focuses on products and services that are highly available. The Product concept emphasizes quality and modern features, often associated with luxury goods. The Selling concept involves aggressive promotion and sales. The Marketing concept centers on understanding customer needs and building strong relationships by providing superior products. The Societal Marketing Concept balances short-term needs with long-term customer equity and societal welfare.

Customer Relationship Levels and Tools

Companies build relationships with their target market at various levels, depending on the nature of the market. Basic relationships involve low-margin customers, where interaction is through advertising and company websites. Full partnerships are formed with high-margin customers. The Frequent Marketing Program rewards customers who buy frequently or in large amounts. The Club Marketing Program offers members special benefits and fosters a community.

Customer Equity

Customer equity is the total lifetime value of the company's current and potential customers. Building the right relationships with the right customers is crucial. Different types of customers include:

• Butterflies: Highly profitable but not loyal.
• True Friends: Both profitable and loyal, they are valuable customers for the firm.
• Strangers: Neither profitable nor loyal.
• Barnacles: Highly loyal but not profitable; the company should aim to convert them into profitable relationships.

Conclusion

In summary, a customer value-driven strategy is essential for businesses aiming to succeed in today's competitive market. By understanding customer needs, creating value propositions, and building strong relationships, companies can enhance their customer equity and ensure long-term profitability.

References

• Kotler, P., & Keller, K. L. (2016). Marketing Management. Pearson.
• Porter, M. E. (1998). Competitive Advantage: Creating and Sustaining Superior Performance. Free Press.