Beruflich Dokumente
Kultur Dokumente
Submitted to-
Mr. Manoj Mishra
Submitted By-
AANCHAL
Roll no. 181602
BBA LL.B.
1st year 2ND semester
CONTENTS
Introduction 4
Difference between Customer Value and Satisfaction 8
Survey Analysis 14
Questionnaire 17
Data Analysis 19
Conclusion 21
Bibliography 23
ACKNOWLEDGEMENT
I would like to thank my faculty Mr. Manoj Mishra, whose assignment of such a relevant and
current topic made me work towards knowing the subject with a greater interest and
enthusiasm and moreover he guided me throughout the project.
I would also like to extend my gratitude to my parents and all those unseen hands who helped
me out at every stage of my project.
INTRODUCTION
“Customer Focus” and “Customer Value” became lovely terms for the marketers and the
managers. People generally use it more and more; indeed, who could argue against such a
concept? But what does it actually mean? More important, what does it imply for the
organization which seeks to be genuinely “customer focused” and what does it mean to
understand “customer value”? Customer value is defined in the marketplace not in the factory
or an agency. A small but growing number of companies in the markets draw on their
knowledge of what customers value or they value to gain marketplace advantages over their
less knowledgeable competitors (Anderson,1998)1. There is a market for offering as two
elemental characteristics: its value and its practice. Companies have to look at the changing
basis for competition in today’s environment and for the future. This paper argues for being
more customer-focused, not as a nicer, more socially acceptable way of life but because
customer value is becoming a commercial imperative. We live in a world which is more
dynamic than ever. Businesses have always had to face competition, but at least in the past
companies knew who their competitors were; they knew the competitors products and their
strengths and weaknesses. All of the competition lay within established market sectors, and
they were mostly, if not entirely, domestic. Indeed, it is not so far back when most were
regional. Today, companies faced that has changed. Competitors cross sector boundaries with
increasing ease. For example, the distinction between banks, insurance companies, fast food
companies becomes increasingly blurred, as does the distinction between such organizations
and anyone else who has a large customer base and a strong financial position. In today’s
world, music stars start airlines, or launch fastfood businesses or soft-drinks companies. The
products, competitors and markets are becoming increasingly globalized. However basis for
the competition is changing. It looks like an iceberg, on the surface, the features on which we
compete are the same as ever: products, quality, price, service, customer base and market
access. But if you look beneath the surface you see that these features are now dependent on
other issues – they are the product of culture, processes and systems, and the structure of our
business. Products /services are obviously at the heart of competition. The problem is that
they keep changing: our competitors will not stand still. For example product innovation is
much more rapid than in the past. Product cycles are getting shorter, and products, even when
delivered by global corporations, are getting more customized. New production and
1
ANDERSON J.C., J. A. Narus, “Business Marketing: Understand What Customers
Value”, Harvard Business Review, Vol. 76, No: 6, 1998, pp. 53-61
distribution even decision support systems make this possible, but systems alone are not
enough. It is necessary to be customer-focused to keep an organization close to its market, so
that its product development is closely aligned to what the market needs. Generally
companies have to understand their customers better; not just to listen to their requirements
but often to anticipate them2. If the companies anticipate these requirements the brand
“values” may not be as strong in the eyes of the consumer as they once were. The concept of
brand values implies that what makes a brand is its “personality” which distinguishes it from
others and that the presence of this personality imparts some utility – however tangible – to
the consumer. There is a strong body of research supporting the idea of brand personality as a
source of value to the consumer 3. However, what seems to be happening is that the changes
in the marketing environment are tending to influence the strength of that value. The thrust of
this paper is that the original concept of brand value is in need of extension, and needs to be
embodied within a wider concept of customer value. The customer value concept recognizes
that marketplace success in the new competitive environment described above will require
not only continued investment in the brand but also investment in customers. The underlying
philosophy is that customers, not just consumers, have goals that they seek to achieve and
that the role of the supplier is to help customers achieve those goals. It is becoming a
commitment for the companies to define the customer value to help to achieve the goals,
which the company and the customer have. Defining customer value There have been many
difficulties for many authors involved in defining value. In an attempt to consolidate these
diverse definitions, 4proposes: “Customer value is a customer’s perceived preference for and
evaluation of those product attributes, attribute performances, and consequences arising from
use that facilitate (or block) achieving the customer’s goals and purposes in use situations”.
Although the multiple contexts, tasks and criteria in the upper definition reflect the richness
and complexity of the concept. This definition has more related to the customer but there is
also the other side for the businesses. Customer value is the difference between the values the
customer gains from owning and using a product and the cost of obtaining the product. On
the other hand we may understand that the total customer value is the total sum of product
value, services value, personnel value and image value. Besides these monetary, time, physic
2
FOX, George, “Customer focus – a commercial imperative”, Managing Service
Quality, Vol. 7, No. 1, 1997, pp. 27–30.
3
CHRISTOPHER Martin, “From brand values to customer value”, Journal of
Marketing Practice: Applied Marketing Science, Vol. 2, No. 1, 1996, pp. 55-66.
4
WOODRUFF R. B. “Customer Value: The next Source for Competitive
Advantage” Journal of The Academy Marketing Science, Vol. 25, No. 2, (spring
1997), 139-154.
and energy costs are the total costs of a customer. Should the customer value be expressed as
a formula:
Total Customer value = Product value + services value + personnel value + image value
Total customer cost = Monetary cost + time cost + physic cost + energy cost
Customer value is the difference between total customer value and total customer cost. Put it
very simply, customer value is created when the perceptions of benefits received from a
transaction exceed the costs of ownership. The same idea can be expressed as a ratio5:
Total cost of ownership The marketing task is to find ways to enhance customer value by
improving the perceived benefits and/or reducing the total costs of ownership. Both the
numerator and the denominator of this ratio should be measured relative to competitive
offers. Total cost of ownership rather than price is used here because in most transactions
there will be costs other than price involved. For example, inventory carrying costs,
maintenance costs, running costs, disposal costs and so on. In business-to-business markets,
as purchasers become increasingly sophisticated, the total cost of ownership can be a critical
element in the purchase decision6. Life cycle costs, as they are referred to in the banking and
industries, have long been a critical issue in procurement decisions in those markets.
Companies have to understand their customers, to know where their business sector is going
as well as to anticipate what systems their customers will need in order to remain at the very
forefront of competition, often to work with them both on future planning and on rapid
implementation. There is to say that the “value” of observed experience is of another nature
from the “value” of philosophy fact. If we did not possess the power of providing for future
wants our lives would be but poorly provided for. For the various cyber businesses of the
future new products would be prepared (Kodama, 2000). Philosophy of Value There is an
importance to understand the philosophy of value for the businesses. And as it is of
importance that businesses should be sensible in advance of the wants of the future which
means the wants and needs of customers. There is an importance of the degree of that
5
CHRISTOPHER Martin, “From brand values to customer value”, Journal of
Marketing Practice: Applied Marketing Science, Vol. 2, No. 1, 1996, pp. 55-66.
6
[6] ELLRAM, L., “Total cost of ownership: elements and implications”,
International Journal of Purchasing and Materials Management, Vol. 29, No. 4, 1993.
sensibility. It should be sufficient. Anxiety about future necessities should be as powerful as
the passion with which the companies give away before the urgent feelings of the moment. If
future satisfaction of want were represented in present valuation, not at their full future value
but at only a small fraction probably would be occurred. Then business life must in the end
fall to pieces, just as though they were not represented at all. It is evident that customers
possess the capacity of acting in consideration of future feelings of want, but observation of
human nature makes it very obvious that they will act with less energy than when they are
under the influence of present feelings. The future wants, wherever it comes into the domain
of the present, is preceded by a psychical reflection, and this reflection is of a totally different
nature from the want itself. It is far finer, more inner side, and, even in the case of purely
bodily wants, is always mental. The hunger of a future day, e.g. do not act as hunger, but as
anxiety for sustenance; the object of desire is the same, but the desiring is different. At
bottom there is a conflict between the needs of today and those of tomorrow is really of a
moral nature for the customers; and goods of today and those for tomorrow is a kind of a
special case of the struggle between impulse and reason. It is not only the foreknowledge that
is wanting, but, quite as much, the previous mental excitation for the customers, the
uneasiness which experiences in the consciousness of the businesses that wants are coming
for which there is no provision. The experience of customer and the experience of the
environment create the value change.
Technological changes
Conflict between existing values
Dramatic events
In every society there are many different values. In international arena values affect
marketing strategies much more than expected. Values are learned with imitation or by
observing the process of reward. There are also some values inoculated and passed from
generation to the next. The markets are composed of consumers with different cultures,
incomes, tastes, expectations, beliefs, norms and motives. These differences differentiate also
the values owned and will be gained. Therefore marketing managers need to take into
consideration these details and this should be used as guides in developing business strategy.
Sheth et al. developed and empirically tested a theory of consumption values, which was
operationalized by identifying five consumption values effecting consumer choice
behaviour7. These are;
Functional
Social
Emotional
Epistemic
Conditional
These values are for consumer choice before buying the goods and/or services. But after the
usage there is much more an importance of physical, emotional and conditional. This is very
effective way to resale the goods and services. Processes should be check out of the tasks
which have to be achieved in order to create and deliver customer value. Here in any business
the core processes need to be managed with cross-functional dialogues and decisions. Basic
implications such as brand development (research & development, sales, marketing,
production, advertising), consumer development (marketing, human resources, finance, sales,
production), consumer management (logistic systems and relationships with intermediaries,
human resources etc), supplier development (more concentration for up-stream relationships)
and supply chain management which should be included the order fulfillment processes. With
this implications there becomes a customer value hierarchy linking the product and/or service
attributes of the firms. This hierarchy begins from sales department through all departments
and top management. Total Quality Management, Business Process Reengineering, Team
working, balance scorecard are some of the contemporary issues in management. It can be
said that for the success of this concepts there should be customer value philosophy.
Competencies should be based at the customer value thinking. This should be a common
sense to reach the customer satisfaction and retention, profitability, increased market share
etc.
To provide some answers to how customer value seen in the companies there are four basic
questions to come a conclusion;
7
ERDEM Orhan, B. Oumlil and S. Tuncalp, “Consumer Values and The Importance
of Store Attributes”, International Journal of Retail & Distribution Management, Vol
27, No. 4 1999, pp. 138.
Can the companies continue to improve and create value? Innovation and Learning
Perspective.
How do the companies look to their shareholders? Financial Perspective.
How do companies look to their stakeholders? General Perspective.
To find some answers to these questions will make companies closer to the customer value
philosophy and if companies follow this philosophy they will be successful in the future
complex business life and cope with the competition and easily respond to the environment.
This study has not been completed because of the time constraints, it is still progressing
Difference between Customer Value and Satisfaction
Though customer value and customer satisfaction sound similar there are some differences
between them. Customer value and customer satisfaction emerge from the same core concept
of customer delight. However, both are used to identify different parameters of customer
experience, customer perception, and purchasing behavior. So, there are some obvious
differences between them. But, on simple sight, they are hard to spot. Both concepts are
important for all organizations, and they need to concentrate on them for business excellence.
The benefits of excelling in customer value and customer satisfaction are customer loyalty,
customer retention, high customer lifetime value, market leadership, and goodwill. Both
concepts are subjective as they have the tendency to be different from person to person.
The terms customer value and customer satisfaction are interconnected and express the
importance of the customer to an organisation. Understanding the differences will be useful
in the correct implementation of these theoretical concepts for business excellence.
Value is one of the highly misused concepts due to ambiguity and lack of clarity as per
Gummerus. Different authors have explained customer value in different modes. So, proper
classification of customer value is important. From a theoretical background, the value
is the total perceived benefit exceeding the total perceived cost. Customers evaluate
the trade-off between the benefits they are acquiring and the price they are paying for those
benefits. Customer value can be shown as an equation as below:
The benefits can be product quality, after-sales services, warranty, repairs costs, free delivery,
customer friendliness, etc. Total customer costs are not only limited to the price, it can
include time spent, energy spend, risks, emotional stress, etc.8 The major attributes that
contribute in deciding the customer value are conformance of product standards, product
choices, price, brand, value added services, relationships, and experiences. The customers
evaluate their perceived value of a brand with other brands available in the market, before
deciding on the purchase. They will buy the product/ service that has superior perceived
value comparatively. So, an organisation has to outperform their competitor in all aspects to
8
Kotler, T and Keller K. (2012). Marketing Management. 14e Global ed., Pearson Education.
be a success story in the market. Benefits of superior customer value for the organization are
delighted customers, satisfied employees, enhanced market share, competitor edge, and
improved brand image. Customers calculate value, before purchasing as it assists them to
make the best choice available in the market. So, customer value is proactive.
Evaluation of customer value metrics assists an organisation to plan a product with higher
benefits than competitors with the price customer willing to pay. Specific value propositions
can be offered to respective customer segments.
Customer satisfaction can drive an organisation to excellence while dissatisfaction can send it
out of business. It has such uniqueness to it. Customer satisfaction can be classified as the
match between customer expectations of the product and the product’s actual performance.
Customer expectation and how they understand the actual product performance is more
emotional. Satisfaction is felt by an individual and not thought. So, it differs from person to
person and is very complex to quantify.
• Customer value is a proactive component, which reflects the state of difference between
customer benefits and customer costs before purchase (pre-purchase ).
• Competitor Comparison:
• Customer value is a relative concept, where customers compare an offering with that of
competitors in deciding which products offers more benefits with fewer costs. Deciding on
the value is a thought process from customer viewpoint.
• Calculation:
• Customer value has a simple equation of deducting costs from benefits. It is rational and can
be explained in monetary terms.
The terms customer value and customer satisfaction are interconnected and express the
importance of the customer to an organisation. Understanding the differences will be useful
in the correct implementation of these theoretical concepts for business excellence.
9
Anderson, J. C., Narus, J. A and Rossum, W, V. (2006). Customer Value Propositions in Business
Markets. Harvard Business Review. March, pp. 90 – 99.
Customer satisfaction and value are both fundamental concepts in the understanding of
marketing. It is important to note that while they are highly interrelated, they also operate
independently.
Essentially, value is when a consumer perceives that they will get a good deal from the
company, brand, product or service. To put this in more marketing terms, the consumer will
see value when the benefits they expect to receive exceed the expected costs and effort
involved in acquiring the product. Please note that customer value is discussed in more detail
in another article on this website.
Therefore, as potential customers (that is, the target market) will be attracted to the offering if
they perceive that the benefits exceed the cost (which equals value), the ability of a firm to be
able to offer good value is paramount to its success in generating ongoing new customers.
This means that value is a pre-purchase assessment of the product by the consumer. If a
consumer perceives that the product brand or service offers very little value based on their
pre purchase assessment OR if they perceive that it offers less value than a competitive
offering, then the consumer will not buy that particular item.
In terms of the buyer decision process (which marketing students will cover in consumer
behavior topics), this pre-purchase assessment occurs in the evaluation phase.
Customer satisfaction, on the other hand, occurs after the consumer has become a customer.
That means they have purchased the product or have had dealings with a service firm with.
Customer satisfaction is their assessment of how well that value was delivered – that is, did
they get the value that they expected to receive? (Again, please note that there is a separate
section article on this website that discusses customer satisfaction in more detail). In terms of
the buyer decision process, this customer satisfaction assessment occurs in the post-purchase
phase.
Therefore, the difference between customer satisfaction and value is that one is a pre-
purchase assessment and the other is a post purchase assessment.
Survey Analysis
Samsung Electronics Co., Ltd. is a global leader in semi-conductor, telecommunication,
digital media and digital convergence technologies with 2011 consolidated sales of US$143.1
billion. Employing approximately 222,000 people in 205 offices across 71 countries, the
company operates two separate organizations to coordinate its nine independent business
units: Digital Media & Communications, comprising Visual Display, Mobile
Communications, Tele-communication Systems, Digital Appliances, IT Solutions, and
Digital Imaging; and Device Solutions, consisting of Memory, System LSI and LCD.
Recognized for its industry-leading performance across a range of economic, environmental
and social criteria, Samsung Electronics was named the world’s most sustainable technology
company in the 2011 Dow Jones Sustainability Index.
In particular, one should focus his/her attention on the company’s emerging mobile phone
business, which has achieved some of the most outstanding gains of any of Samsung’s
business lines. The objective of this study is to gain helpful insights into how a late-comer to
an industry can overcome certain disadvantages and successfully position itself as a widely
respected and successful brand. Hardly anyone would deny the claim that Samsung mobile
has achieved notable success in the global market. As such, it could be worthwhile to take a
closer look to find out which factors have contributed most to its success. The survey
attributed Samsung's rise in Indian market to its rich product portfolio catering to customers
of all budget categories. "Samsung handset prices range from Rs. 1,500 to Rs. 55,000 and
come in varied screen sizes. These two factors helped the company grab customer's attention,
besides the product quality and new features," Cutting edge technologies like 3G Wireless,
Broadband, Intelligent Appliances for Home Networking, Multimedia, Networking mobile
operating system have been some of the focus areas for the company. During this period of
about 7 years, the organization has grown in strength in terms of numbers as well as in terms
of the expertise that it possesses in certain key technology domains. One of the success
factors of Samsung mobile phones is their innovative designs and functionality. The company
developed unique but user-friendly designs that were closely integrated with innovative
product concepts, allowing it to launch many first-in-the-world mobile phones. Samsung has
pretty much single-handedly grown Android by an immense amount over the last couple of
years. Before the Galaxy S2 and Note line came along, Samsung was just like any other
OEM, carrying on much like Motorola and LG, with Apple way out in front in terms of
global market share. There was simply nothing to compete against the giant. Jump to Q3 of
2013, and Samsung has shipped 130.1 million devices in a single quarter, beating out phone
manufacturers like Apple, Nokia, and LG combined.
Market Share of Various Brands
With 6% of the overall smartphone market, Phablets (which IDC defines as smart phones
with a screen size of 5.5 inches - 6.99 inches) are observed to be hitting a plateau.
Smartphones with screen sizes between 4.5 inches and 5.5 inches are seen as the sweet spot
for consumer preference. However, consumers need larger screen sizes to enjoy media
content and with the 4G rollout expected in CY2015, hence Phablets segment is expeced to
pick up again. In 2010, HTC was the world's biggest maker of smartphones that used
Google's Android operating system. Now it has joined two other former titans, Nokia and
BlackBerry, in a desperate search for profit and growth. Samsung and Apple's seemingly
unassailable lead over their rivals. According to a recently released report from Strategy
Analytics, Samsung captured 29% of the globe’s phone market, with a 7% jump in shipments
over last year’s Q3. Somewhat surprisingly, Nokia captured second place with 15.5%, while
Apple came in at 8% and LG with 4.4% of the global market. Huawei came in 5th, and
unfortunately, HTC was placed in the “other” category. As Nokia [ADR] has launched the
new smart phones of Lumia series – majority of which running on Windows Phone 8 OS –
the troubled handset maker is betting big time over its aggressive advertisement approach. In
spite of all such efforts, sales results are failing to reach market expectations and the Finnish
handset maker is finding itself in roughsurface to regain its lost glory. It’s been more than 2
years for Nokia’s much hyped marriage with Microsoft. At the time industry analysts were
divided over move as many believed that could overshadow Nokia’s left over changes to
bounceback. Later, with the decision to ‘kill’ Symbian Nokia got itself cordoned off by
Microsoft and left on the mercy of the success of Windows Phone 8 OS.
Nokia’s Aggravated Marketing Proving Fatal
In November last year, Nokia introduced Lumia series powered by Windows Phone 8. Every
smartphone from the series holds different hardware configuration, though, the OS remains
same. Unfortunately, Nokia hasn’t got much say from OS prospective, resulting in acting
more or less like a hardware maker of a phone unlike Samsung-Android which goes hand-on-
hand in terms of customization flexibility for each smartphone.
At the same time this fact cannot be denied that Micromax surpassed Samsung Electronics
Co. to become the top mobile phone supplier in India in the second quarter of 2014, capturing
17% of the market, up from 13% in Q1, according to a report by Counterpoint research.
Micromax also overtook Nokia Corp. in the quarter to become the leading feature phone
supplier and closed in on Samsung to become the second largest smartphone vendor.
Buoyed by high demand for smart phones, the mobile handset market in India is estimated to
have grown by 14.7% in 2012-13 to touch Rs. 35,946 crore, according to a Voice Data
Survey. The market grew from Rs. 31,330 crore in FY'12 with Korean electronics maker
Samsung dethroning Nokia from the top position this year, the survey said. The 18th annual
survey 'V&D 100' covered over 30 mobile handset companies doing business in India across
categories like feature phones, multimedia phones, enterprise phones and smart phones. The
survey attributed Samsung's rise in Indian market to its rich product portfolio catering to
customers of all budget categories."Samsung handset prices range from Rs. 1,500 to Rs.
50,000 and come in varied screen sizes. These two factors helped the company grab
customer's attention, besides the product quality and new features," it added. The survey said
Samsung ended the year with revenues of Rs. 11,328 crore in 2012-13 as compared to Rs.
7,891 crore in FY'12, a growth of 43.6%. It also became the market leader with 31.5% market
share.
The Q3 2014, results revealed the second consecutive quarter of more than 80% year-on-year
shipment growth for smart phones, reflecting robust end-user demand for the category in the
devices market in India. The share of smart phones in the overall mobile phone market stood
at 32% in Q3 2014, which is a considerable increase over 19% in the same period a year ago.
Questionnaire
1. Why do you buy a smart phone? (select maximum 3 choices)
Business purposes
Others
When it is ruined
Applications
Business purposes
Music
Videos
Game
Friends Recommendations
Internet Reviews
Social Media
Printed Ads
TV
5. What's the range you are willing to pay for SAMSUNG smartphone ??
1000 - 2000
2000 - 3000
3000 - 4000
Yes
No
7. When you buy a cell phone, what's your preferred payment method??
Cash
Credit Card
Mobile shop