mba 671 dr. s. borna. objectives ä define value & satisfaction - understand how to deliver them...
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MBA 671MBA 671Dr. S. BornaDr. S. Borna
ObjectivesObjectives
Define value & satisfaction - understand Define value & satisfaction - understand how to deliver themhow to deliver them
The nature of high-performance The nature of high-performance businessesbusinesses
How to attract & retain customersHow to attract & retain customers Improving customer profitabilityImproving customer profitability Total quality managementTotal quality management
Determinants of Customer Delivered Value
Determinants of Customer Delivered Value
Image valueImage value
Personnel valuePersonnel value
Services valueServices value
Product valueProduct value
Totalcustomer
value
Totalcustomer
value
Monetary costMonetary cost
Time costTime cost
Energy costEnergy cost
Psychic costPsychic cost
Totalcustomer
cost
Totalcustomer
cost
Customerdelivered
value
Customerdelivered
value
Resources Organizationand
aligning...
High Performance BusinessHigh Performance Business
ProcessesBy improving critical business...
Stake-holders
Set strategies to satisfy key...
Mar
gin
Margin
The Generic Value ChainThe Generic Value Chain
Primary Activities
Su
pp
ort
Act
ivit
ies
Procurement
Serv-ice
Technology Development
Human resource management
Firm infrastructure
InboundLogistics
Opera-tions
Out-bound
Logistics
Market-ingand
sales
Levi Strauss’ Value-Delivery Network
Levi Strauss’ Value-Delivery Network
Competition is between Competition is between networksnetworks, not companies., not companies.The winner is the company with the better network.The winner is the company with the better network.
Delivery
Sears(Retail)Sears
(Retail)Levi’s
(Apparel)Levi’s
(Apparel)
Order
Delivery
Order
CustomerCustomer
Delivery
Du Pont(Fibers)Du Pont(Fibers)
Order
Delivery
Order
Milliken(Fabric)Milliken(Fabric)
Satisfied Customers:Satisfied Customers:
Are loyal longerAre loyal longer Buy more (new products & upgrades)Buy more (new products & upgrades) Spread favorable word-of-mouthSpread favorable word-of-mouth Are more brand loyal (less price Are more brand loyal (less price
sensitive)sensitive) Offer feedbackOffer feedback Reduce transaction costsReduce transaction costs
One of the prerequisites ofOne of the prerequisites ofExchange: Each party has Exchange: Each party has something that might be of value something that might be of value to the other party.to the other party.
intrinsic value/ extrinsic valueintrinsic value/ extrinsic value
The Concept of ValueThe Concept of Value
According to Lancaster (1966)According to Lancaster (1966)
A product is a bundle ofA product is a bundle of attributes.attributes.
• tangible objectstangible objects• servicesservices• ideas/conceptsideas/concepts• personalitiespersonalities• placesplaces• organizationsorganizations
The bundle of attributes can The bundle of attributes can be made up:be made up:
total value total costtotal value total cost
totaltotalproductproductofferingoffering
totaltotalcost:cost:tangibletangibleintangibleintangible
Net Net valuevalue
Net ValueNet Value
CONSUMER SATISFACTIONCONSUMER SATISFACTIONDISSATISFACTIONDISSATISFACTION
Satisfaction/Satisfaction/dissatisfactiondissatisfaction is a person’s feelings of a pleasureis a person’s feelings of a pleasureor disappointment resulting fromor disappointment resulting fromcomparing a product’s perceivedcomparing a product’s perceivedperformance (or outcome) in performance (or outcome) in relation to his or her expectations.relation to his or her expectations.
PrepurchasePrepurchase PostpurchasePostpurchase
Expectation ofExpectation ofProductProductPerformancePerformance
Actual ProductActual ProductPerformancePerformance
ComparisonComparison
SatisfactionSatisfaction
dissatisfactiondissatisfaction
How to measure consumer s/ds?How to measure consumer s/ds?
1.1. Complaint and suggestionComplaint and suggestion systems:systems: (hot lines, 800 numbers, etc.(hot lines, 800 numbers, etc.2. Customer Satisfaction 2. Customer Satisfaction surveyssurveys3. Ghost Shopping3. Ghost Shopping4. Lost customer Analysis4. Lost customer Analysis Note: Measurement ProblemsNote: Measurement Problems
How to handle customers’How to handle customers’complaints?complaints?Need for a complaint managementNeed for a complaint managementprocess.process.The need for customer retention,The need for customer retention,Customer Lifetime valueCustomer Lifetime valueMeasurement problems related related Measurement problems related related to customer life time valueto customer life time value
1.The Concept of Quality1.The Concept of Quality2.Marketer’s Role in 2.Marketer’s Role in Defining and Delivering Defining and Delivering Quality Quality
Product QualityProduct Quality
QualityQuality
QualityQuality is the is the totality of features totality of features and characteristics and characteristics of a product or of a product or service that bear on service that bear on its ability to satisfy its ability to satisfy stated or implied stated or implied needs.needs.
#1
PRODUCT QUALITYPRODUCT QUALITY
THE CONCEPT OF QUALITY:THE CONCEPT OF QUALITY:
HOW TO “OPERATIONALIZE”HOW TO “OPERATIONALIZE”
IT?IT?
(P.W. Bridgeman, (P.W. Bridgeman, The Logic ofThe Logic of Modern PhysicsModern Physics))
In general, we mean by any In general, we mean by any concept nothing more than a setconcept nothing more than a setof operations; the concept isof operations; the concept issynonymous synonymous with the with the corresponding set of operations.corresponding set of operations.
(H. Marcuse, One Dimensional Man)(H. Marcuse, One Dimensional Man)
Product QualityProduct Quality (S. Schnaars)(S. Schnaars)
Why product quality is moreWhy product quality is moreimportant?important?1. Competitive pressures to1. Competitive pressures to increase qualityincrease quality2. Quality advantage of imports2. Quality advantage of imports
overover
3. Quality is more important to 3. Quality is more important to consumersconsumers
4. Quality is sustainable4. Quality is sustainable
Product QualityProduct Quality Cont.Cont.
Different views of product qualityDifferent views of product quality
Views Views
Products that Products that workwork
Reliability Reliability DurabilityDurabilityConformance toConformance toSpecificationSpecification
88 Dimension ofDimension ofProduct QualityProduct Quality
Design ExcellenceDesign ExcellencePerformance Performance Product featuresProduct featuresServiceability,Serviceability,AestheticsAesthetics
Superior Superior SatisfactionSatisfactionof Needsof Needs
Perceived Perceived QualityQuality
Different views of product qualityDifferent views of product quality
What Is Quality?What Is Quality?
According to Kotler:According to Kotler:
Quality is the totality of featuresQuality is the totality of features
and characteristics of a product orand characteristics of a product or
service that bear on its ability to service that bear on its ability to
satisfy stated or implied satisfy stated or implied
(consumer’s) need.(consumer’s) need.
Quality mix: The need forQuality mix: The need formultiple perspectivemultiple perspective
QUALITY MIX ISSUESQUALITY MIX ISSUES
a. ABSOLUTE QUALITYa. ABSOLUTE QUALITY b. RELATIVE QUALITYb. RELATIVE QUALITY
CONFORMANCE Q.CONFORMANCE Q.PERFORMANCE Q.PERFORMANCE Q.
1
ISSUE NO. 2ISSUE NO. 2OBJECTIVE VS.OBJECTIVE VS.SUBJECTIVE MEASURESSUBJECTIVE MEASURES
ISSUE NO. 3ISSUE NO. 3DIFFERENCES AMONG PRODUCTDIFFERENCES AMONG PRODUCTCATEGORIESCATEGORIES
ISSUE NO. 4ISSUE NO. 4CHANGES IN VALUED ELEMENTSCHANGES IN VALUED ELEMENTS
Quality Mix StrategiesQuality Mix Strategies
INCREASING OVERALL INCREASING OVERALL LEVEL OF QUALITYLEVEL OF QUALITY
ELEMENTS OF QUALITYELEMENTS OF QUALITY
FOCUSING ON A FOCUSING ON A QUALITY SEGMENTQUALITY SEGMENT
Quality improvementQuality improvement
ELEMENTS OF QUALITYELEMENTS OF QUALITY
TRADING PRICE AND QUALITYTRADING PRICE AND QUALITY
HIGHHIGH
LOWLOW
LOWLOW HIGHHIGH
PRICE
QUALITYQUALITY
BB
X
A
C
E
D
REQUIREMENTS FOR REQUIREMENTS FOR QUALITY IMPROVEMENTSQUALITY IMPROVEMENTS
1. LONG-TERM COMMITMENT1. LONG-TERM COMMITMENT2. EMPLOYEE INVOLVEMENT2. EMPLOYEE INVOLVEMENT3. WORKER TRAINING3. WORKER TRAINING4. PRODUCT DESIGN4. PRODUCT DESIGN5. MARKETING-R&D INTERFACE5. MARKETING-R&D INTERFACE6. LONG-TERM CONSUMER6. LONG-TERM CONSUMER
SATISFACTION SATISFACTION
ReviewReview
Define value & satisfaction - Define value & satisfaction - understand how to deliver themunderstand how to deliver them
The nature of high-performance The nature of high-performance businessesbusinesses
How to attract & retain customersHow to attract & retain customers Improving customer profitabilityImproving customer profitability Total quality managementTotal quality management
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