MN 305 INDUSTRIAL MANAGEMANT AND MARKETING

Group Assignment on Marketing

CUSTOMER DELIVERED VALUE

MODEL

Group Members
1. De Silva P.A.G.S 0503** EE
2. Fonseka W.P.I 050*** CSE
3. Shamil ****** CSE
4. Perera B.M.D 050308V EE
5. Ranawaka ****** EE
6. Rathnayake ******* EE
INTRODUCTION

Marketing oriented organization first determines what its potential customers desire, and then builds the
product or service in the belief that customers use a product/service because they have a need, or
because a product/service provides a perceived benefit. In order to customer to utilize a product or
service , it should deliver some value to the customer. In marketing Customer delivered value is defined
as ,
Customer Delivered Value = Total Customer Value - Total Customer Cost

where bundle of benefits from product is referred to as Total Customer Value and bundle of costs
incurred in evaluating, obtaining, using, & disposing of product is referred to as total Customer Cost.

Customer Delivered Value Model gives more insight view of how an organization can deliver value to
its potential customers. Following figure shows the Customer Delivered Value Model .

Image Value

Personnel Value

Total Customer Value

Service Value

Product Value

Customer Delivered Value

Monetary Cost

Time Cost
Total Customer Cost

Energy Cost

Psychic Cost

There is a direct relationship between the customer delivered value and the satisfaction of a customer.
A highly satisfied customer will produce more benefits to the organization, thus any organization will
try to maximize the customer delivered value from their product/service. To maximize Customer
delivered value an organization needs to increase the total customer value while keeping customer cost
low.
The above figure describes the determinants of both total customer values and total customer cost. The
image value is the value the image which an organization or a product has created in the past while
product/service value reflects the actual value of the particular product/service utilized .The monetary
cost is the actual cost incurred while utilizing a particular product/service. To utilize some
product/service one need to spent time and energy. This is reflected in time and energy cost. The
satisfaction one gets is referred as the psychic cost.

The objective of this report is to discuss how the above model can be used by Sri Lankan organizations
in order to improve customer delivered value. Following four organizations are selected for the
discussion.

1. Sri Lankan Airlines

2. ***********************************
3. Cargills
4. ***********************************

Sri Lankan Airlines

Sri Lankan Airlines which is the national carrier of Sri Lanka is a leading airline operating in Sri Lanka.
The airline operates an all-Airbus fleet of 14 aircraft, to Asia, Europe and the Middle East.

Total Customer Value

Image Value

Under the trademark phrase 'You're Our World', Sri Lankan Airlines is always known for its' excellence
over the last few years .Despite being a smaller airline operator than others, Sri Lankan Airlines has won
reviews and awards. In March 2003 the Skytrax Research Agency’s worldwide passenger survey voted
Sri Lankan, for the third consecutive time, Best Airline of the Year for Central Asia. Further, in that same
year TTG(Asia) voted Sri Lankan Best Airline in South Asia. In 2001 the UK’s Wanderlust magazine
placed Sri Lankan eighth in its Top Major Airlines travel award category. Therefore it is clear that , Sri
Lankan Airlines has already created great image value and continue in doing so with its excellence
service.
Personnel Value

Over the last few years , Sri Lankan Airlines has moved towards societal marketing , which reflects that
it is using some of profits for the benefits of the society. Sri Lankan Cares is the community
development arm of Sri Lankan Airlines is committed to the empowerment of the child through
education, good health and a sustainable environment. Some of its welfare projects are Diriya Daruwo
which empowering thousands of school children across Sri Lanka, Meepagama Jayanthi Maha
Vidyalaya project , and etc. Sri Lankan Airlines has contributed significantly in post Tsunami
projects as well. Further with its frequent flyer awards program 'Skyawards' the customers of Sri
Lankan Airlines feels higher personnel value in utilizing services of Sri Lankan airlines.

Product/Services Value

Sri Lankan Airlines has won a good reputation for unsurpassed levels of passenger comfort , modern
traveler – in-flight entertainment, freshest and highest quality meats, and friendly in-flight services. For
example its ultra modern aircrafts provides generous 32 inches of legroom in Economy Class, and seats
that have adjustable headrests, footrests and lumbar supports. Further it is ready to carter diverse of
customers. For example it provides in-flight meals for different people from diverse Medical and Dietary
and Religious backgrounds. Therefore Sri Lankan Airlines has achieved higher products / service value
in its operation.

Total Customer Cost

Monetary Cost

Sri Lankan Airlines is ranked as a moderately cost airline in the aviation industry. Although it is not an
low cost airline, it is well known for providing highly satisfactory service for the amount of money
charged.

Time Cost

With its widely distributed network, it is very much convenient to reserve tickets in Sri Lanka airlines. It
is operating more than 50 offices around the globe. On the other hand with its highly efficient website ,
reservation is very much convenient. Thus it is obvious that Sri Lankan Airlines has taken necessary
steps to keep the time cost at a minimum. With its; continuously expanding network , it is believed that
the time cost for customers will be low further.
Energy Cost

Sri Lankan Airlines is well known for its efficient and reliable services. It is believed that by flying on
the schedule with no flight delays has contributed much in keeping energy cost of the customer which is
the cost of utilizing service of a particular organization .

Psychic Cost

With proven record of excellent management , and maintenance of aircrafts , Sri Lankan Airlines ranks
as one of the safest airlines across the globe . Except those occasions due to terrorism , Sri Lankan
airlines has not suffered any accident in its long history. The assurance of safe , efficient reliable service
has largely contributed in keeping psychic cost of the customers.

From the above discussion , it can be seen how Sri Lankan airlines has used Customer Delivered Value
Model in maximizing the customer delivered value. The expansion of the above model in the future will
definitely will have positive outcomes for the organization.