Chapter 10 Mini Sim on Creating Customer Value
50% MENTORING MOMENT: THE 4 PS After a firm understands a consumer's needs and wants and designs a value-driven marketing strategy, it must construct an integrated marketing program (often called the marketing mix) that delivers value to the consumer.The marketing mix is the marketer's toolbox, which contains the 4 Ps: Product, Price, Promotion, and Place.Keeping with the fitness theme, identify the marketing mix elements for a personal trainer.You must drag and drop one item at a time and then click Submit to see your results. After clicking Submit, you will be able to drag and drop another item, repeating the process.
PRODUCT: - Package of six one-hour sessions with an ACSM Certified Personal Trainer, Kathy PRICE: - Training sessions are available for $50 per hour, or $250 for a package of six one-hour sessions PLACE: - You meet with your personal trainer at 10 am on Friday at the gym to receive your first personal training session PROMOTION: - ACSM Personal Trainer Kathy uses her social media outlets Facebook and Instagram to connect and communicate with existing and potential clients by highlighting her clients' success stories
38% DECISION POINT: CRAFTING YOUR VALUE PROPOSITION Now that you have chosen which consumers to serve, you need to decide how best to serve them. Powerfully Fit's value proposition should capture the values and benefits it promises to deliver to its consumers to satisfy their needs and wants. Marketing analysts present you with three different value propositions to choose from. Given your target market selection, choose the value proposition that would be most effective. Select an option from the choices below and click Submit. a) "Lead the Pack, Create Power." — Powerfully Fit provides innovative fitness technologies that never run out of power. b) "Athlete Approved, Style Ready." — Powerfully Fit provides fitness apparel that is both functional and stylish. c) "Train Smarter, Spend Less." — Powerfully Fit provides innovative fitness technologies that fit any budget.
a) "Lead the Pack, Create Power." — Powerfully Fit provides innovative fitness technologies that never run out of power. You selected "Lead the Pack, Create Power." This was the best choice. This value proposition captures your target market's desire for innovative fitness technology and captures Powerfully Fit's competitive advantage -- power generation.
13% DECISION POINT: EVALUATING WHAT CONSUMERS WANT The VP of Marketing gives you marketing research on three different consumer desires in the fitness technology market. As a first step, you need to prioritize the desires of actual and potential buyers of Powerfully Fit's products. In order for exchange to happen, Powerfully Fit must be able to satisfy these wants. VP of Marketing: "Keep in mind that our goal is to engage customers by creating exceptional customer value that results in a profitable customer relationship. The first step in creating customer value is understanding consumer needs and wants relative to our new products. Choose the market desire Powerfully Fit should focus on satisfying." Select an option from the choices below and click Submit. a) Function: consumers want wearable technology with the latest and greatest functionality. b) Price: consumers want wearable technology that is inexpensive. c) Style: consumers want wearable technology that helps them express their sense of style and individuality.
a) Function: consumers want wearable technology with the latest and greatest functionality. You selected "function" as the most important need and want. This was the best choice because Powerfully Fit's new products have the ability to generate power through nanotechnology, which is a functionality that is different than and superior to the competition.
88% DECISION POINT: CHOOSING YOUR CUSTOMER RELATIONSHIP STRATEGY Creating value for the consumer is one important responsibility for marketers, but no less critical is the marketer's responsibility for creating value for the firm. One measure of value from a firm's perspective is whether the exchange was profitable to the firm. Loyal customers are often, but not always, the most profitable customers. Your marketing analysts have developed two different customer relationship strategies at your request. You need to choose the strategy that will maximize value for the firm. Select an option from the choices below and click Submit. a) New and Old: Powerfully Fit needs to focus on getting new customers as well as keeping its existing customers. Therefore, Powerfully Fit should split its marketing budget between new customer acquisition and existing customer retention. b) New Customers: Powerfully Fit needs to focus on getting new customers, and therefore should dedicate all of its marketing budget to new customer acquisition.
a) New and Old: Powerfully Fit needs to focus on getting new customers as well as keeping its existing customers. Therefore, Powerfully Fit should split its marketing budget between new customer acquisition and existing customer retention. You chose "New and Old." This was the best choice. Developing a relationship with a customer requires an investment even after the product has been purchased. In fact, it is more expensive to attract a new customer than to keep an old one.
25% DECISION POINT: CHOOSING YOUR TARGET MARKET The VP of Marketing directs you to begin looking at markets for Powerfully Fit's products: "Assuming that we focus on the desire for fitness technology functionality, what market do you think would benefit most from our offerings?" Select an option from the choices below and click Submit. a) Gym Newbie: This largest market is new to fitness and working out. Gym newbies work out once a week and are price sensitive about their fitness spending. b) Weekend Warriors: This large market works out 2-3 times a week and mixes up running with gym time. Weekend warriors typically purchase mid-level shoes and apparel and use a fitness app on their phone to track their workouts. c) Marathon Madness: This mid-size market works out daily. Workouts often include long distance runs. Quality, durable products are attractive to this market, and marathoners are willing to pay premium prices to get the latest tech.
c) Marathon Madness: This mid-size market works out daily. Workouts often include long distance runs. Quality, durable products are attractive to this market, and marathoners are willing to pay premium prices to get the latest tech. You chose Marathon Madness as your target market. This was the best choice. This market is attractive to Powerfully Fit due to its size, willingness to pay a premium price, and desire for the latest fitness technology.
56% DECISION POINT: CREATING VALUE THROUGH SUPPLIERS One of the key relationships Powerfully Fit must build is with its suppliers. Because power-generating nanotechnology is the most important feature in its product, Powerfully Fit collects four proposals from manufacturers who want to produce Powerfully Fit's patented nanotechnology. Your boss asks you to evaluate these potential suppliers, each of which has a different competitive advantage. Keep Powerfully Fit's target market and value proposition in mind as you choose a supplier for the nanotechnology. Select an option from the choices below and click Submit. a) Low Price: This supplier produces the least expensive nano-processor on the market, but its reliability is the worst. Its products are known for its high defective and malfunction rate. b) Close Location: This supplier is located closest to Powerfully Fit's manufacturing facility, so delivery lead-times would not be an issue. It produces a mid-level quality product that is moderately priced. c) Quick Turnaround: This supplier can fill nano-processor orders more quickly than competing suppliers. The quality and price of the products it produces are average. d) High Quality: This supplier produces the highest quality nano-processors available on the market today. Although the unit prices are on the high side, their reliability is the best.
d) High Quality: This supplier produces the highest quality nano-processors available on the market today. Although the unit prices are on the high side, their reliability is the best. You selected "High Quality." This was the best choice. Consumers spending a premium price for their wearable technology expect a high-quality, reliable product. To manufacture a high-quality product, you need high-quality parts.
69% DECISION POINT: CHOOSING WHERE TO SELL YOUR PRODUCT Another key relationship that Powerfully Fit must develop is with its intermediaries, the retailers and wholesalers who will make the products available for sale to the ultimate consumers. Intermediaries can add value to the marketing system in many ways including product display, customer service, and product assortment. Keep Powerfully Fit's target market and value proposition in mind as you choose which intermediary you will recommend to carry Powerfully Fit's products. Select an option from the choices below and click Submit. a) Specialty Running Store: This small independent store carries a large selection of items, all related to the sport of running. This high-end store provides a high level of customer service and charges high prices. b) Sporting Goods Store: This sporting goods chain carries a large selection of items for many sports. There is some customer service available in the departments and a wide variety of manufacturers' products for sale at manufacturers' suggested retail prices. c) Discount Superstore: This large chain store carries a small selection of items across many departments including clothing, electronics, toys, and beauty aids. The store provides limited customer service and merchandising. d) Warehouse Club: This warehouse club focuses on selling items in bulk to its members at deep discounts. Merchandise is displayed haphazardly on tables and open shelving, and customer service is nonexistent.
a) Specialty Running Store: This small independent store carries a large selection of items, all related to the sport of running. This high-end store provides a high level of customer service and charges high prices. You chose "Specialty Running Store" as your intermediary partner. This was the best choice for Powerfully Fit's complicated product. Since the specialty store provides a high level of customer service, its employees can easily explain the superiority of our product to its customers.
81% DECISION POINT: HOW YOU WILL HANDLE CUSTOMER SERVICE Customer service creates value for consumers but is an expense to the firm that must be managed. Your boss asks for your recommendation as to how Powerfully Fit should provide customer service. Select an option from the choices below and click Submit. a) Minimal Support: Customers can access customer service agents via Internet only from noon-4 PM, Monday through Friday. Consumers are encouraged to troubleshoot their own issues via the website FAQ. The cost to provide this level of service is low. b) Limited Support: Customers can access customer service agents via phone and Internet during regular business hours, Monday through Friday. The cost to provide this level of service is moderate. c) Unlimited Support: Customers can access customer service agents via phone and Internet 24/7/365. Representatives are always available and willing to help customers. The cost to provide this level of service is extremely high.
b) Limited Support: Customers can access customer service agents via phone and Internet during regular business hours, Monday through Friday. The cost to provide this level of service is moderate. You chose "Limited Support." This was the best choice because it creates a significant amount of value for the customers and is a moderate level of financial investment for the firm. This strategy creates equal value for both customers and the firm.