Customer Centricity
Products and services deliver fundamental elements of value that address four kinds of needs. They are?
Functional, emotional, life changing and social impact
"People don't want a 1/4 drill, they want a 1/4 hole."
Theodore Levitt
Key ways to improve price realization
-Service companies use dynamic pricing implemented through yield management systems -factors affecting how a company might customize prices (tastes, nature of use, intensity of use, competition)
3 Critical Inputs of Value pricing approach
-TEV -PV -COGS
Two valuable tools for the organization (firm)....when judging the economic impact of various price - and sales-volume scenarios are:
-breakeven analysis -marginal math
Customer price sensitivity in terms of quantitative market research is based on
-customer surveys -price experimentation -analysis of historic pricing and sales data
Success profile of customer centric organizations
-customer-centric rather than product or technology-centric -out compete other firms in terms of deep customer insights -they integrate branding with customer centricity -they reward their employees for customer-focused innovation, creating -entrepreneurial, open organizations, and -environments where employee participation is encouraged, with special emphasis on "delighting customers"
Marketers often assess TEV by using a cost structure study to understand...
-customers underlying economics -performance of competitors products -the relative advantage/disadvantage of the focal point
Price Sensitivity is high if... Price -_____ (easy/hard) comparability -____(low/high) in a relative sense -_____ prices exist -____ (Is/Is not) needed as a quality que
-easy -high -reference -not needed
Price Sensitivity is high if.... Product -____ (low/high) differentiation of alternatives -____ (easy/hard) comparability
-low -easy -will perform as expected -not mission-critical
Price Sensitivity is high if... Buyer ???
-sophisticated/deliberative -bearing costs -able to switch easily -not motivated by prestige
effective pricing requires what?
-understanding of how consumers respond to changes in price -how various price/quantity combinations effect the economics of the firm
Effective pricing requires these two details
-understanding of how customers respond to changes in price -how various price/quantity combinations affect the economics of the firm
Value Pricing hinges on what two elements
-value orientation -processes
T/F- The higher the sensitivity to price the greater willingness to change.
True
Value orientation
a focus on the economic value created by an organization's products for the given customer -setting
TEV = ???
cost of the next best alternative + value of the performance differential
BEV = ???
fixed cost/revenue per unit-variable cost per unity fixed costs/unit margins
Resonance focus model
involves demonstrating a deep understanding of customer's needs, differentiating or highlighting offerings on the few elements that matter most to target customers
Marketing
is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large
Demand Landscape
reveals how products, services or brands intersect in time and space with consumer's occasions to: -live -work -play as defined by the matrix of goals, activities, and priorities that constitute the leading features of the landscape
Unit Margin (unit contribution)
the difference between the per unit revenue by a firm and the variable cost of production
Customer Orientation
the set of beliefs that puts the customer's interest first, ahead of those of all other stakeholders such as owners, managers, and employees
Processes
to capture a portion of (said) value for the firm. -getting
Customer price sensitivity in terms of managerial judgments is based on...
12 qualitative indicators based on product, price, buyer
Marginal Math
An analysis of the profitability of a price change based on the relative size of the unit margin.... Would the firm be better off lowering price to spur demand or increasing price to increase unit margin?
ISO-Profit curves
An analytic tool that is conceptually related to breakeven analysis that can be used to conside the advisability of one price point versus another
How does a company build a customer-centric culture?
Coordination, Cooperation, Capability, Connection
