MGT 302- Topic 2

show rooming

When consumers go to a brick and-mortar store to physically check out purchase options and then using online options to find items at a lower price

Big Data

a broad term for datasets so large or complex that traditional data processing applications are inadequate.

cloud

a metaphor for the internet indicates software or data storage and analysis is being hosted on the internet

order loser

a product characteristic that disqualifies your purchase from consideration

Customer Relationship Management (CRM)

a software system that enables a company to accurately profile consumers by tracking consumers' wants and buying habits, a sophisticated form of consumer segmentation

expectancy disconfirmation model

a theory that seeks to explain post-purchase satisfaction in the form of a function of expectations, perceived performance and disconfirmation of beliefs

Which of the following is not one of the core value dimensions?

act

B2C consumers

aka Business to Consumers transactions or relationships 1) Product Research (consumer reports) 2)Comparison Shopping (showrooming) 3)Post-Purchase Evaluation (amazon reviews)

moments of truth

any interaction between a consumer and firm

Which of the following initiatives represents a true customer-success strategy?

at the customer, for the customer, six sigma at the customer (Both a and C)

order qualifier

characteristics that customers perceive as minimum standards of acceptability to be considered as a potential for purchase

Which of the following are steps in ABC classification?

classify companies by sale, modify classifications based on strategic issues (A and C only)

_______________ processes influence how you deal with information; ________________ processes influence how you react to experiences.

cognitive, affective

Which of the following is a primary technology system employed in customer relationship management suites?

data capture and data storage (B and C only)

Which of the following primary technology systems is needed to make sense of data by making hidden relationships visible?

data display

Visionary Leaders know

if you want to win in today's global marketplace, you must make creating customer value the focus of your business model as well as your day-to-day operations

time utility

involves making sure that a product arrives when it is needed, not earlier or later

automation

involves substituting capital equipment for labor to improve process efficiently/ effectively ex)3D printing

outsourcing

moving from make to buy, asking a supply chain partner to perform a specific task that the company itself used to do it

_______________ and _______________ are primarily responsible for creating form utility.

operations, purchasing

Which of the following represents the dark side of modern data analytics and the trend toward customer profiling?

past buying behaviors do not predict future buying behavior

place utility

primarily in charge of supply chain managers who assure that products and services are where customers except to find them when they are needed

value propositions

promises you make to customers about how your firm will meet their needs 1)they shape consumer expectations 2)they communicate what your company must do to ear a consumer business

Which of the following is one of the fundamental steps in resource orchestration?

select team members, assign team roles (b and c only)

reverse auction

suppliers respond to an RFQ via an online system during a dedicated time window, which is usually very short (about a half an hour), unlike regular auction (ebay), prices DECREASE thus named reverse - since a lower price is charged by supplier is a preferred option

resource orchestration

the skill that enables companies to bring the resources of the entire supply network together 1)Select team members 2)assign team roles 3)build team cohesion

Data Analysis

they are learning how to increase customer satisfaction and profits 1)targeted promotions 2)product section 3)new product development 4)pricing

loyalty card programs

track your behavior, making it easy for your favorite stores to get to know your buying habits. Walmart, a loyalty card holdout, is piloting self-scan technology that lets you scan products with your smart phones as you place them in your cart.

Go beyond satisfaction

your goal is to use operations to create customer experiences that drive revenue growth 1)acquire new consumers 2)increase sales with existing customers

Customer classifications

"-A" Customers: Strategic key accounts—the most important 5-10% of your customers—typically make up a huge share of sales, profits, and growth. You do everything possible to make sure their experiences are remarkable. "-B" Customers: Other key accounts that receive very high levels of service. -"C" Customers: The remaining 80% of your customers. You provide them high levels of standardized service.

modify classifications based on strategic issues

-A customer may possess unique skills that will drive future market advantage. -A customer may control scarce resources (a new patent) that will spur sales growth. -Intensive collaboration may uniquely improve the customer's market positioning—and your opportunity to grow.

datas dark side

-Companies know just how good a customer you are—and unless you're a high roller, they would rather lose you than take the time to fix your problem. -looking backward: past buying behavior doesn't predict future behavior -looking beyond the mark: low levels of shopping activity may reflect more on your company's service offering than on the quality or profitability of a customer. Blind trust in the data can be dangerous. Even so, a well-designed CRM system can help you turn every customer contact into an opportunity to create a profitable customer

Value Gaps

-Only the customer determines satisfaction Gap 1: Knowledge Gaps often exist between customers' real expectations and your perceptions of those expectations. You need to accurately assess what customers really want. Gap 2: Translation or Specification Gaps emerge when you focus too intently on industry standards or internal capabilities that are not aligned with customers' real needs. Gap 3: Performance Gaps emerge when you fail to execute to customer expectations—e.g., the customer expects 98% on-time delivery, but you only deliver 95% of shipments on time. Gap 4: Communication Gaps emerge when you overpromise and under deliver. These gaps sour a relationship quickly. Gap 5: Perception Gaps arise when customer metrics don't capture actual performance. Sometimes, customers treat you as if, "You are only as good as your last performance." Gap 6: Satisfaction or Service Quality Gaps occur when the customer's perception of service and expectations are not aligned.

Customer service strategies

-The goal: Managers hope that by meeting industry standards they are meeting customers' needs. (ex LL Bean) 1)preforming to the common denominator 2)doing the wrong things

innovation

-The time between new product introduction and product "obsolescence" is constantly shrinking. Rivals can copy and introduce their own "new-and-improved" version within six to nine months -Iphone comes out quickly -In one instance, products introduced six months late, but within budget, realized a 33% decrease in expected profits over the first five years. Products introduced on time, but 50% over budget, realized only a 4% reduction in profit -often overshadowed by the quest for new products -Walmart -Dell

agility

-change is the only constant in the business world -adapt to respond as customers make special requests -2011 Tohoku earthquake -Every minute ahead of the enemy is an advantage." -Make agility a priority throughout the firm and across supply chain relationships. -Map processes to make them visible and to identify agility enabling activities or decisions. Use your map to initiate risk-mitigation discussions and identify operating alternatives. -Use information systems to monitor operations, link to customers, promote proactive environmental scanning, and share information on a real-time basis across the network. -Cross-train workers and organize work in multifunctional teams. -Design performance measures to value agility. -Build learning loops into every process throughout the organization. EX)toyota production is fast reliable and flexible

data capture

-critical -analysis is held captive by the quality of data you possess -Cookies allow Internet retailers to track every "click" you make while browsing their websites (online retailers have an advantage over amazon) -brick and mortar - loyalty cards

Delivery

-customers value speed- fast reliable delivery cycles improve forecast reliability and reduce the need to carry inventory -Toyota makes sure "doing things faster" is consistently -Any activity that lengthens the time or increases the variability of the order cycle damages your firm's ability to deliver on time

CRM systems 4 Primary technology systems

-date capture -data storage -data analytics -information display

affective level

-emotions drive the process, leading to a "gut" reaction to what you are experiencing -refers to reactions rising from or expressing feelings or emotions

The Formation of Satisfaction Perceptions

-exceptions cognitive and affective -People make decisions based on what they expect to happen as a result of their choices -consumers posses a priori expectations

Customer delight

-the ones who view their experience during the two moments of truth as surprisingly good (i.e., remarkable)—become loyal. -Satisfaction is based on fulfilling the expected; delight is based on fulfilling the unexpected positive surprise-based occurrences. Satisfaction is based on meeting or slightly exceeding expectations, while delight occurs from features that are not expected or that add unexpected utility.

cognitive level

-your mind processes information—e.g., advertising and memories—for each experience, creating a learned expectation -refers to a conscious intellectual activity including thinking reasoning or remembering

customer loyalty

1) Defection. When customers endure a bad experience, they defect. If you don't have an effective service recovery program, your company loses business quickly. By the way, social media amplifies this effect as customers tweet, on Facebook, Instagram, or Snapchat about both remarkable and bad experiences. 2) Indifference. Experiences that meet expectations deliver satisfaction. However, if rivals are just as good, indifference results. These experiences are an order qualifier not an order winner. Don't mistake convenience-driven customers for loyal customers. 3) Loyalty. Only uniquely positive experiences motivate customers to be loyal.

customer satisfaction strategies

1) they want to learn about customer needs. 2) They also want to convince customers they are committed to fulfilling those needs. ex)proctor and gamble

Consumer Expectations

1)Dissatisfaction -Experiences that don't meet expectations evoke discontent. Bad experiences invite complaints. 2)satisfaction -Experiences that meet expectations deliver satisfaction 3)delight - Experiences that exceed expectations achieve delight and lead to repeat business

to manage operations four utilities

1)Form Utility 2)possession Utility 3)time utility 4)Place utility

Three decision rules can help you determine how much weight to place on each value dimension as you design your operations.

1)Get into the game- Cost and quality thus tend to be order qualifiers 2)Differentiate yourself- Customers must view your delivery, agility, and/or innovation as an order winner 3)avoid disqualification- Your customers are keeping score. Having an order loser will make it impossible to earn enough points to win (or keep) a customer's business.

quality assess factors (david garvin)

1)Performance—refers to a product's operating characteristics. 2)Features—are the unique characteristics that distinguish a product from rivals' products. 3)Reliability—defines the user's ability to count on the product not to fail. 4)Conformance—is how well a product conforms to design specifications. 5)Durability—refers to a product's life expectancy (also, mean time between failure). 6)Serviceability—is the speed and ease of repair when problems occur. 7)Aesthetics—are perceptions of fit and finish (also, artistic value). 8)Perceived quality—refers to a product or brand's quality reputation. Six Sigma is the gold standard in quality philosophy and practice

Reduce Costs Strategy

1)Process Improvement 2)automation 3)offshoring 4)Outsourcing

data-gathering initiatives answer

1)What value/experience do customers really expect? How do they define quality, delivery, agility and other key value areas? 2) How do customers measure our performance? Are our measures consistent with theirs? 3) How well does our performance meet our customers' expectations and requirements? 4)In what ways could we improve performance to differentiate ourselves in customers' minds? 5)Would customers really value better performance—enough to pay for it?

weaknesses that are inherent to customer satisfaction surveys

1)broken trust -Your company breaks a promise. Trust is damaged and deep dissatisfaction emerges. 2)SKU proliferation -r desire to meet every customer's needs promotes excessive product/service proliferation, undermining operating efficiencies and performance 3)Unprofitable relationships - Too much stress on satisfying customers has led even world-class firms to unknowingly invest in unprofitable relationships. 4) historical focus - You may focus too much on what has worked in the past and miss opportunities to disrupt expectations and steal rivals' customers.

ABC step process

1)classify companies by sales 2)modify classifications based on strategic issue 3)Periodically Re-Evaluate

Values "Scoreboard"

1)cost 2)quality 3)delivery 4)agility 5)innovation To win customers' business, you must grasp the nature of these value dimensions and build the operating systems to create and deliver them.

Communicate to put consumers first (2 ways)

1)purpose for our work 2)Moment of Truth

How many months does it take rivals to copy and introduce their own new-and-improved version of a newly introduced product?

6-9

data storage translations

A gigabyte is 1,024 megabytes A terabyte is equal to 1,024 gigabytes A petabyte is 1,024 terabytes An exabyte is 1,024 petabytes A zettabyte is 1,024 exabytes

order winner

A product characteristic that makes your product attractive; that is, an order winner differentiates your product in a way that leads a customer to want to buy it.

hidden plant

A term coined to describe the fact that 15-40% of a firm's capacity is used to find and fix poor-quality work.

data display

A visual projection of patterns in data, for example, as tables or figures.

What are the two types of touch points?

Acquisition; Utilization

accuracy forecast improvement

Agility improves and costs go down. If you manage your operations as a holistic system, the value dimensions can work together like the spokes of a wheel to move your company to a more competitive market position.

ABC classification

An application of the Pareto Principle to identify and group items—e.g., customers, suppliers, SKUs—in terms of how important they are. Most decision makers use three categories: A items are extremely important; B items are moderately important; and C items are relatively unimportant. -AKA the 80/20 rule because 80 percent of sales are driven by the most important 20 percent of consumers

value gaps

Any disparity that exists in identifying, defining, and delivering outstanding customer experiences that can undermine perceptions and damage relationships.

Which value dimension is most important?

Based on your own personal experience, you're probably thinking: "It depends—various dimensions are important in different buying situations. Terry Hill (professor) language 1)Order winner 2)order qualifier 3)order the loser

Which of the following customer-service strategies focuses on meeting industry standards in key operational areas like product quality, productivity, product availability, on-time delivery, and service reliability?

Customer Service Strategy

Why do you need to know how your customers define value?

Customers make purchase decisions based on the value they expect to obtain. Does this justify the cost?

DMAIC

Define, Measure, Analyze, Improve, Control, aka the quality improvement process (from six sigma) -Jeffery Immelets, CEO GE made 6 sigma popular and calls it a common language quality is important everywhere

Moment of Truth

Each touch point between a customer and a company is a moment of truth; that is, an experience that might influence customer feelings/perceptions of the company. EX) Scandinavian Airlines- The goal: Empower front-line employees to solve customer problems on the spot—as soon as they arise- 2 years later they won Air Transport World Named SAS Airlines of the year

To really execute a customer satisfaction strategy, you need to find out how customers both perceive and measure your firm's performance.

FALSE

Consistent repeat business is a clear and unambiguous signal that a customer is loyal.

False

If you deliver to promise, exceed industry standards, and meet customers' a priori expectations, you will definitely impress the customer and entice repeat purchase.

False

In the Internet age, delivery has been called the most vital factor to long-term competitive success.

False

When it comes to data capture, bricks-and-mortar stores like Walmart have a distinct advantage over their online rivals.

False

build team cohesion

Having the right players does not mean they will play well together. You need to cultivate chemistry to build the right relationships among team members.

By changing the manufacturing environment it is possible to achieve higher levels of performance across all value dimensions. Which of the following is a critical aspect of improving the environment?

Increase Process visibility, better share information, build a flexible workplace (all of the above)

form utility

Involves acquiring inputs and transforming them into products and services of greater consumer value

possession utility

Involves translating customer needs and service requirements, promoting the resulting product's value, and facilitating exchange so the customer may "possess" a product or service. (falls within marketing domain)

assign team roles

Knowing each player's skills, you assign each team member the right roles and responsibilities to maximize value creation and customers' positive perceptions.

select team members

Knowing what value you need to create, you identify the right players—those with key resources and capabilities—to be members of your value-added team.

offshoring

Moving operations from the country where a company is headquartered to a country where pay rates are lower but the necessary skills are available. typically far-flung countries with low cost inputs

process improvement

Process improvement involves finding better ways to add value. Continuous process improvement is important to improving productivity and remaining competitive.

utilization touch points

Refers to the process of actually using a produce—after you have purchased it.

acquisition touch points

Refers to the process of learning about a product and making the decision to buy it.

Consumers Importance

The customer is the only person who puts money into a supply chain. Everyone else merely recycles it

supplier of choice

The go-to supplier for a customer's needs. That is, the supplier that is preferred above and beyond rival suppliers.

Predictive Analytics

The practice of looking for hidden patterns from very large data sets to identify trends and predict outcomes.

Peter Drucker's Advice

There is only one valid definition of business purpose: to create a customer. What the customer buys and considers value is never just a product. It is always a utility, that is, what a product or service does for him.

Customers buy things to acquire a set of satisfactions (the things the product or service does for them). What does this mean for you?

To deliver high levels of satisfaction, your company must not just create outstanding value but it must create the value customers desire and are willing to pay for. -business week March 12, 1990 had a headline "King Customer"

ABC classification relies on the Pareto principle. The Pareto principle observes that 80% of your customers drive 20% of the benefits.

True

Customers should really be at the center of your decision-making world because they are the only entity that puts money into a supply chain.

True