2000 Prentice Hall

Objectives
Define value & satisfaction - understand
how to deliver them
The nature of high-performance
businesses
How to attract & retain customers
Improving customer profitability
Total quality management
2000 Prentice Hall
Determinants of Customer
Delivered Value
Image value
Personnel value
Services value
Product value
Total
customer
value
Monetary cost
Time cost
Energy cost
Psychic cost
Total
customer
cost
Customer
delivered
value
2000 Prentice Hall
Satisfaction is a persons
feelings of pleasure or
disappointment resulting
from comparing a products
perceived performance (or
outcome) in relation to his or
her expectations.
2000 Prentice Hall
Resources Organization
and
aligning...
High Performance Business
Processes
By improving
critical business...
Stake-
holders
Set strategies to
satisfy key...
2000 Prentice Hall
The Generic Value Chain
Primary Activities
S
u
p
p
o
r
t

A
c
t
i
v
i
t
i
e
s

Procurement
Serv-
ice
Technology Development
Human resource management
Firm infrastructure
Inbound
Logistics
Opera-
tions
Out-
bound
Logistics
Market-
ing
and
sales
2000 Prentice Hall
Levi Strauss
Value-Delivery Network
Competition is between networks, not companies.
The winner is the company with the better network.
Delivery
Sears
(Retail)
Levis
(Apparel)
Order
Delivery
Order
Customer
Delivery
Du Pont
(Fibers)
Order
Delivery
Order
Milliken
(Fabric)
2000 Prentice Hall
Satisfied Customers:
Are loyal longer
Buy more (new products & upgrades)
Spread favorable word-of-mouth
Are more brand loyal (less price
sensitive)
Offer feedback
Reduce transaction costs

2000 Prentice Hall
Levels of Relationship
Marketing
Many
customers/
distributors
Medium
number of
customers/
distributors
Few
customers/
distributors
Accountable Proactive Partnership
Proactive Accountable Reactive
Accountable Reactive
Basic or
reactive
High
margin
Medium
margin
Low
margin
2000 Prentice Hall
Inactive or
ex-customers
Customer Development
Partners Advocates Clients
Repeat
customers
First-time
customers
Suspects
Prospects
Disqualified
prospects
2000 Prentice Hall
Customer/Product
Profitability Analysis
P
1

Highly
profitable
product
P
2

Profitable
product
P
3

Losing
product
P
4

Mixed-bag
product
P
r
o
d
u
c
t
s
+
+
+
High
profit
customer
+
-
Mixed-bag
customer
+
-
-
Losing
customer
C
1
C
2
C
3
Customers
2000 Prentice Hall
The Profit Triangle
Competitive advantage
Profit
2000 Prentice Hall
Quality
Quality is the
totality of features
and characteristics
of a product or
service that bear on
its ability to satisfy
stated or implied
needs.
#1
2000 Prentice Hall
Review
Define value & satisfaction - understand
how to deliver them
The nature of high-performance
businesses
How to attract & retain customers
Improving customer profitability
Total quality management