Beruflich Dokumente
Kultur Dokumente
By Karen W Miller
Dr Karen W Miller
UNIVERSITY OF SOUTHERN QUEENSLAND
THE VALUE OF
MARKETING
TO BUSINESS
The notion of creating genuine customer value is not new. However, the practice of
demonstrating the value that marketing provides an enterprise is challenging many
marketing managers and academics alike. Underpinning this challenge is some confusion
around the term marketing, what it means and does for an enterprise. Hanssens and
Marketing is a
profit centre and
Pauwels (2016) suggest that some of this confusion about the value of marketing to an
enterprise is caused because of the various viewpoints to do with the term, marketing.
They (Hanssens and Pauwels 2016 p 173) argue that -
not a cost centre
“Marketing is a philosophy (customer centricity), an
organisational function (the marketing department), and a set of (Hanssens and Pauwels 2016)
specific activities or programs (the marketing mix).”
Distribution Minor
Price promotion No
Innovation Major
Marketing is a core function within any enterprise whether recognised or not, as it is Services
responsible for reflecting customer value back to the enterprise and ensuring the
enterprise is co-creating value for its existing and potential customers. Marketers often Events
seek to understand customers to discover what is important to them, how they think,
Experiences
feel and use goods and services and where any pain points may lie that need solutions to
improve the life of the customer. People
Places
MARKETING DEFINITON
Properties
Marketing is the activity, set of institutions, and processes for
Enterprises
creating, communicating, delivering, and exchanging offerings that
have value for customers, clients, partners, and society at large (AMA Ideas
2018). Information
The key words of this marketing definition are: (Kotler and Keller 2015)
The modern concept of marketing began after World War 11, when
the focus was on supply, production, and finding new markets for the
goods produced. War-like terms were created at this time, terms
such as scattergun approach and target market. During this time,
enterprises focused on efficiencies of production and generating sales. The sales
orientation of marketing focused on advertising to the market and creating demand and
sales for the goods produced.
With the saturation of markets with goods, marketers began to focus on developing
relationships with customers, and the notion of creating value-added relationships
became a key influence in marketing management strategies.
Give—for—get
Value is exchanged in the market place. Two (or more) parties each have something
of value the other wants so each give and each get when they exchange value.
Marketing management takes place when at least one party to a potential exchange
thinks about the means of achieving desired responses from other parties.
Defined, marketing management is the art and science of choosing target markets, and
getting, keeping and growing customers through creating delivering and communicating
superior customer value (Kotler and Keller 2015)
The skills of marketing management are changing and these skills require training and
development. Marketing is a management function that involves analysis, planning,
implementation and control. Other management functions also have planning structures
that link to the corporate plan in larger enterprises.
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Marketing managers are key leaders who facilitate the co-creation of marketing strategic EFFECTIVE MARKETING
thinking, implementing and evaluating strategic operational plans. Research into from
MANAGERS
Moorman and Day (2016) into marketing managers’ shows that they are likely to add
value to the performance of an enterprise when the enterprise is outward looking in its prioritise target customers at the
strategic thinking and decision-making. If an enterprise has an innovative marketing core
orientation culture and branding permeates the enterprise from top down, then not only align the leader talk and actions
is the enterprise more likely to succeed, it is more likely to have a marketing manager attract curious and open minded
that is adding value. At the core of the marketing orientated culture and all of the marketing people
strategic thinking throughout the enterprise are the target customers. build thorough values, beliefs,
behaviours and artefacts
build effective formal and
informal learning mechanisms
introduce resources and rewards
demonstrate impact across
financial and non-financial
outcomes
embrace complexity
make sense of data
rely on frameworks
identify the right metrics
work in teams
encourage creativity
make the world a better place
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Moorman and Day (2016, p. 12) argue that marketing capabilities are: performance. Attracting important
financial, human, and other resources
Market sensing and knowing management capabilities – notably including market and engaging in asset management that
orientation as the process of generating, disseminating and responding to marketing develops and deploys marketing assets
intelligence (Moorman and Day 2016, p. 27).
Relational capabilities such as customer relationship management (CRM) processes of
acquiring and retaining valuable customers and managing channel partnerships 1) Anticipation
Management of the brand asset and the leverage of brand equity 2) Adaption
Strategic marketing planning, implementation and control capabilities that direct and 3) Alignment
coordinate the deployment of tactics and specific capabilities to co-create value 4) Activation
Specific functional capabilities related to the co-creation of marketing value through 5) Assessing accountability
the marketing mix of the 7-ps, which are product offerings, personnel, physical 6) Attraction and
environments, process management, price, place, promotion and communication 7) Asset management
activities.
To build superior marketing capabilities, Moorman and Day (2016) argue that the process
begins by identifying which knowledge skills are important to the success of the
enterprise and from consideration of the types of value it will offer to its customers. To
ensure capabilities create superior value it is important to identify the knowledge and
skills necessary to meet objectives. Then where skills fall short, the idea is to build
knowledge and skills through professional development and training. The next
step is to embed the skills and capabilities through formal and informal
frameworks, design processes, and integrate these throughout the enterprise.
The later stages of the building superior marketing capabilities accumulate experience,
which drives costs down, improves effectiveness, and protects the enterprise from rivals
and builds a sustainable competitive advantage by prioritising and serving target
customers over the long run (Moorman and Day 2016).
The role of seven (7) marketing activities is the basic ingredients of the ways in which
marketing teams add value to the performance of the enterprise. The 7As includes
marketing contributions to anticipating marketplace changes, adapting the enterprise to
such changes, aligning the processes, structures and people. Activating efficient and
effective individual and organisational behaviours; creating accountability for marketing
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Learning activity
1. Using the box above, write down in your own words your thoughts about what
marketing is and what marketing managers and marketing teams do
2. Share your thoughts on Study Desk
3. Respectfully comment on another person’s Study Desk post.
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UNDERSTANDING CUSTOMER VALUE Typically, consumers only notice the
attributes that are important to them.
Aligning the customer perceived value with customer generated value and vis-versa is These attributes are then aggregated by
challenging and Kumar and Reinartz (2016, p 36) are the following questions. customers through a categorisations
process into more abstract benefits such
1) What is value to the customer?
as (easy, convenient, fun etc.). These
2) How customer perceptions of value exchanged are measured?
abstract benefits help consumers to
3) How is value from the customer measured and managed?
reduce information overload and to
4) What are the drivers of customer value?
facilitate further processing. Customers
5) How are the drivers of customer value incorporated into real-time marketing
are seeking offerings that yield the
decisions?
highest expected value (Kumar and
Reinartz 2016).
PERCEIVED VALUE
Defined, perceive customer value of an offering refers to the
aggregation of benefits that the customer is seeking, expecting, or
experiencing and the undesired consequences that come with them
(Guttman 1982).
Benefits (or gains of the offering) and the pain-points (annoyances and undesired
consequences of the offering) are the results of buying and consuming the offering.
These may accrue directly or indirectly and be immediate or delayed (Guttman 1982;
Osterwalder et al 2014). The pain-points and the undesired consequences have a Value is at the heart of the
negative impact on perceived value, whereas, the gains (or benefits) have a positive
influence on perceptions of value. Value is perceived when the benefits outweigh the
customer experience.
pain-points or undesired consequences. The central aspect of this conceptualisation is Understanding customer
that customers choose actions that maximise the desired consequences and minimise
concurrent undesired consequences. Both the benefits and the pain-points are generated value or what potential
through offering attributes in that people receive benefits, whereas offerings have customers’ value is key
attributes (Guttman 1982).
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UTILITARIAN VALUE
- is gratification derived from something that helps the
consumer to solve problems or accomplish tasks that
are part of his/her life (Babin & Harris 2017)
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SYMBOLIC VALUE
Symbolic value is the extent to which customers attach or
associate psychological meanings through product use (Reed
2015).
These associations are based on the individual’s self-concept or self-worth (Sirgy 1982)
and value comes from perceptions that the use of the product offering is enhancing the
individual consumer’s self-concept, either how they see themselves or how they think
others see them. Wearing makeup provides symbolic value to numerous consumers, as
these people feel more confident with the use of makeup as the perception is that
makeup enhances their appearance. Any offering that improves how an individual feels
about her/himself is an example of symbolic value. Sometimes symbolic value is referred
to as social value, because the premise of symbolic value is the individual’s perception of
enhancing their ‘actual’ or ‘social’ self-concept. More often, it is about enhancing the
social self and the perception of appearing better in the eyes of others.
EXPRESSIVE VALUE
Expressive value is the reflection of one’s self-
concept or self-actualisation or personality (Reed
2015).
This is where the individual consumer is confident in who they are and
are sharing who they are as a person. This is where a consumer using
makeup will use it to express who they are regardless of what others
think. In some cases, these people are wearing bright pink or purple
lipsticks or black (e.g. grunge).
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Learning activity
1. Consider three recent purchase made by you in the last week.
2. Identify the types of value that you experienced from these three products (goods
or services).
3. Place your answer in the box below
4. Share one of your examples of ‘value’ on Study Desk
5. Comment on another person’s example.
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The primary value in traditional marketing seems to be ‘market value’, that is the Vargo, Maglio and Akaka (2008, p145)
creation of economic value to sellers and buyers. Many argue that the very purpose of argue the notion of value has changed
marketing is value creation, but how is it created and for whom? from a goods-dominant logic to a
services-dominant logic. The quotes
Let us look at how various people have considered the concept of value creation. from their paper are listed below.
Miles and Snow (1978) suggest that value comes from choosing customers and In a goods-dominate (G-D) logic, value
narrowing down the operational focus to serve best that market segment. They is created (manufactured) by the
argue that customer satisfaction and brand loyalty do not by themselves create enterprise and distributed in the market,
unmatched value. usually through exchange of goods and
money. From this perspective the roles
Porter (1985) believes that an enterprise is profitable if the value it commands of ‘‘producers’’ and ‘‘consumers’’ are
exceeds the costs involved in creating the product. distinct, and value creation is often
thought of as a series of activities
Condra (1985) interprets value as a fair return in goods, services or money for performed by the enterprise. An
something exchanged that are judged worth equal or more than something similar alternative view service-dominant (S-D)
(i.e. competitors product) logic is tied to the value-in-use meaning
of value (Vargo and Lusch, 2008a)……..
Merrifield (1991) says that an increase in value that occurs at each stage of the
manufacturing process and that value resides in the concentration of resources In service-dominant logic, the roles of
focused on selected business areas. producers and consumers are not
distinct, meaning that value is always
Woodruff (1997) supposes that the key source of competitive advantage for the co-created, jointly and reciprocally, in
21st century is creating value. interactions among providers and
beneficiaries through the integration of
Treacy and Wiersema (1997) see value as resulting from the fulfilment of resources and application of
customer expectations, through which the enterprise achieves the economic competences.
benefit.
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The Service-Dominant (S-D) logic viewpoint argues that enterprises offer value
propositions and that value is co-created during interactions, and the customer in context
subjectively determines that value. That is when the customer uses the good or the
service. As such, value cannot be communicated or delivered to the customer in
VALUE IS
accordance with a value proposition, as the traditional goods-based marketing logic-
informed value proposition literature maintains, because value depends on both the CO-CREATED
interaction and the customer context (Vargo and Lusch 2008). Further thinking on the
notion of a value propositions, Pires et al (2014 p 1) posits that value propositions are DURING
co-created and co-produced via customer and supplier participation in exchange
processes. This viewpoint notes the key stakeholders required in the value chain and it INTERACTIONS
moves away from the goods-dominant logic – such as Porters value chain (1985).
The notion of value propositions are changing as the argument is that value is co-created AND IN THE
and co-produced. The traditional goods-dominant logic argued that the enterprise
created the value proposition for the market, then communicated (to the customer) then CUSTOMER
delivered to the market for the value to be exchanged. The alternate viewpoint uses
services-dominant logic and argues that value isn’t realised and doesn’t occur until it is CONTEXT,
co-created during interactions and in the customer context.
Skalen et al (2014) developed a framework (see below) that shows the process of
THEREFORE
developing a value proposition and argued that when operant and operand resources are
stabilised, and a stable relationship exists among the practices, a value proposition will VALUE IS NOT
exist that is aimed and benefiting the customer’s value creation. Operand resources are
those on which an act or operation is performed and operant resources are those that act COMMUNICATED
on other resources (Madhavaram and Hunt 2008 p 67). These practices, Skalen et al
(2014) argue, enable the maximum utilisation of the enterprise’s knowledge and skills, OR DELIVERED.
allowing the enterprise to interact with other parties to develop value propositions.
provision,
operant &
management, services new or developed
operand
orgainising and innovation value propositons
resources
representational
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A value proposition is a common term used in marketing and by Marketing Managers
and is an implicit promise an enterprise makes to a customer to deliver a particular
combination of values (Treacy and Wiersema 1997). The subsequent application of this
concept has changed the focus of operations of many enterprises. For example, IBM has
shifted the traditional, internally focused functions to customer-oriented, market-driven
processes, looking towards a form of value delivery. In doing so, these enterprises have
to make some fundamental decisions on segmentation and target customers’ profiles
(Walters and Lancaster, 1999).
3. Customer intimacy – these enterprises focus on delivering not what the broad
market wants, but what specific targeted customers want. Customer intimate
enterprises do not pursue one-time transactions they cultivate relationships.
They specialise in satisfying unique needs. Their proposition to the customer is
‘we have the best solution for your pain points and we provide all of the support
you need to achieve optimum results’.
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The notion of three value proposition types may (or may not) limit strategic thinking and The value chain concept identifies each
may potentially miss characteristics and competencies critical to the market that could step in the ‘chain’ and enables an
influence the competitive advantage of an enterprise. Porter (1985) argues that analysis of how each contributes to
competitive advantage cannot be understood by looking at the enterprise as a whole. He creating customer value.
argues that it stems from the many discrete activities an enterprise (small, medium or
large) performs in designing, producing, marketing, delivering and supporting its goods When an enterprise identifies an activity
and services (or products). Each of these activities can contribute to an enterprise’s that is not contributing as much as
relative cost position and create a basis for differentiation in the market. possible to value in relation to its cost-
effectiveness, then it enables managers
The solution argues Porter (1985) is the value chain. The value chain disaggregates an to consider various internal or external
enterprise into its strategically relevant activities in order to understand the behavioural solutions so there is an integrated
costs and the existing and potential sources of differentiation. An enterprise gains a seamless process flow in which every
competitive advantage by performing these strategically important activities more component adds value.
cheaply or better than its competitors perform.
These support activities are integrating functions that cut across various
primary activities within the enterprise. An enterprise can deliver more value
to its customers performing these activities more efficiently than its
competitors or by performing the activities in a unique way that creates
greater differentiation (Porter 1985).
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Figure 3: Value chain (Porter, 1985)
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Until the customer ‘speaks’ in the marketplace by offering a given
price for exchange, the price of the final offering is only an
assumption. Take for example, the notion of market failure
where the offering ultimately ‘fails’ in the marketplace (i.e. the
consumer will not buy or is willing to pay a price below the cost to
produce and deliver the offering to the marketplace). The value
added by each enterprise in the supply chain (i.e. suppliers of the
raw materials or the technology, processing, parts, assembly,
manufacturer, distributors, retailers) will have been based on the
assumption of a successful final value judgement of the offering in
the marketplace (Porter 1985). The customer is the ultimate
judge of value.
Beyond speaking in the marketplace, the role of the consumer in the ‘system’s’ value-
creation process is far from clear. The production-orientation sees that value is
something produced by the enterprise and delivered to the customer. The alternative,
marketing-orientation model sees the customer as central to strategy development.
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Design-led thinking value-creation processes see value as a co-creation process in which This connection is referred to as
value is co-created through interactions between the enterprise and the customer, and empathy mapping in design-led thinking
not in value chains, but in value ‘constellations’. terms. The mission of design thinking is
to translate observations into insights
Consumers can play a role in value creation too, not just enterprises, and the role of and insights into valuable offerings (or
consumption – i.e. the activities, behaviours and motivations that consumers undertake goods and services) that will improve the
when making decisions and forming perceptions about products (goods and services) – is lives of customers.
one of value creation (rather than using or depleting value).
Empathy is the mental habit that moves
To design thinkers, behaviours are never right or wrong, they are always meaningful. beyond thinking of people as survey
The job of the Marketing Manager with a design-led thinking approach is to convert participants, experiments, laboratory
customer pain-points into solutions or customer needs into demands by placing the rats or standard deviations. Bridges of
customer at the centre of the strategy (or story) and putting people first (yes, before insight are built through empathy, the
products) and co-creating customer-value adding experiences. effort to see the world through the eyes
of others, understand the world through
Gaining customer insights comes from observing and interacting with customers seeing
their experiences, and feel the world
and understanding their lived experiences. The evolution from design to design thinking
through their emotions. By undertaking
is the analysis of co-creation of value through the relationship between people
the customer journey and mapping the
(consumers) and products.
customer journey with the jobs the
Simply asking the customer to fill in a survey frames the problem, and therefore the customer expects to be done, the
solution, from the perspective of the Marketing Manager and the enterprise, rather than benefits (gains) customers are seeking
from the perspective of the customer. and the pain-points customers are
experiencing, the problems can be
It is possible to spend days, weeks, or months conducting research from the perspective understood better and insights gained.
of the customer through observation, but at the end of it all, there will be little more than From these insights, design thinkers map
stacks of field notes, videos and photographs unless there is a connection with the people the customer jobs, their pains and gains
(target customers) being observed at a fundamental level. and develop or fit solutions that co-
create value and customer demand.
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Design thinkers, Diego Rodriguez and Ryan Jacoby developed a ‘Growth Matrix’ to Most growth occurs through brand
evaluate the fit solutions that co-creates value for customers (cited in Brown 2009). extensions (extend), incremental
changes through the customer feedback
The Growth Matrix looks creating solutions for customers and sees innovation from the loop (continuous improvements) and/or
perspective of Marketing Managers. The Growth Matrix is useful to evaluate the through evolutionary change when
innovation within an enterprise. The Growth Matrix maps innovation efforts along a designing a fit to new customer markets.
vertical axis and on the horizontal axis maps existing to new customers or users. Using
the Growth Matrix Marketing Managers and other managers in the C-suite can get a good New offerings that are revolutionary
picture of how the enterprise is using innovation at a strategic level to manage, extend, happen the least often because they are
adapt or create business growth. the most challenging and risky, yet they
can be the most profitable and can
create new markets. Examples of
revolutionary (new) offerings with new
customers from an existing enterprise
New EXTEND CREATE are Sony Walkman and Apple iPod.
offerings Examples of new businesses (offerings)
(evolutionary) (revolutionary) that were revolutionary are Google,
Facebook, Airbnb and Uber.
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Marketing is complicated and has been the weakness of many formally prosperous
enterprises such as Levis Straus, Kodak, Nokia, Sony and Xerox. These enterprises
achieved success with a product-orientation and this served them well for many years.
The product orientation focuses on managing incremental changes or by managing
growth through brand extensions (see the left-hand side of the Growth Matrix).
More recently, successful growth in the marketplace has occurred through the right-hand
side of the Growth Matrix. This is because customers change, as they inevitably do and
new markets emerge because some enterprises focus on innovation, co-creation of value
and change with the people they hope to serve, their customers.
A recent change to the notion of value is that customers do not always want to own
goods and services. More recently, customers are opting to share, rather than own.
Customers are using subscription services (i.e. Netflix) and share services (i.e. Uber).
The landscape for value is changing and challenging Marketing Managers is keeping with
the pace of change about what potential customers’ value.
Marketing Managers and their marketing teams are continually challenged to co-create
value with their customers when, where, how the customer desires. Marketing is not just
the job of the Marketing Manager and the marketing team.
Marketing permeates enterprises with an outward focus that seek to understand their
markets or look for new markets to serve. Non-marketers are expected to be marketers
in this modern world. However, not everyone understands what marketing is and how it
works.
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Learning activity
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