Therefore, the study of price elasticity of demand is usually supplemented or replaced by the study of sensitivity based on the study of the value system of consumers. As already shown, main idea This approach consists in the fact that consumers compare the merits of the product and the costs of its acquisition and use. When the product provides best ratio benefits/costs, the customer makes a purchase. Thus, price sensitivity is determined by the perceived value of the product. Establishing a direct relationship between the price of a product and the demand for it, as is done in the study of elasticity, is a simplification that ignores an important causal variable - the perception of the buyer, which, in addition to price, is influenced by many other factors, competitors' prices, forms of sale of the product, image of the product etc. Therefore, it is important to understand the perception, identify its factors, and then find the means of influencing them.
It can be seen that the perceived value of brand 6 is below average, while brands 3 and 4 are perceived as the best. Ceteris paribus
Such valuations make it possible to measure price sensitivity in terms of perceived value (utility) rather than volume of sales. This approach is less precise, but it does allow comparison of the relative price sensitivity of different consumer groups.
| Rice. 1.7. The perceived value of the product and competitive advantage |
Perceived value of the product
How justified is the practice of setting prices using standard markups In general, any calculation method that does not take into account the level of demand, the perceived value of the product and the level of competition does not allow reaching the optimal price. Pricing using the cost plus markup method works only if the set price provides the sales volume planned by the supplier.
All more companies when calculating the price proceeds from the perceived value of the goods, when not the costs of the seller, but the perception of the characteristics of the goods by buyers are considered as a key pricing factor. To form in the mind of the consumer a positive idea of the value of the product, non-price elements of the marketing mix are used, namely advertising and promotional activities.
The choice of a particular option depends on many factors, including company A's current market share, actual and planned production capacity, market growth rates, consumer sensitivity to prices and perceived value of the product, dependence of profitability on market size, and likely strategic
A company faced with a competitor's price change should attempt to analyze its impact and the likely duration of the low price period. Price-attacked market leaders may choose to maintain prices, increase the perceived value of products, reduce prices, increase prices or improve quality, or launch a new low-cost product line.
Consumer-oriented methods include a range of perceived value-based methods and a group of demand-based methods.
Among the methods based on the perceived value of the goods, the method of calculating the economic value of the goods and the method of estimating the maximum acceptable price are distinguished.
What is the Perceived Value Method?
When a person enters a particular market as a buyer, he already has an idea of a certain degree of adequacy of the prices of goods in this market. Of course, the level of the price range in which the purchase will be made depends on the level of income of the buyer (household), but this very dependence of the probability of purchase on the price is determined by the absolute cost of the product and the product group. , tobacco products by low-income groups is relatively higher than the purchase of expensive equipment by the same groups. Accordingly, for buyers with an income level that allows them not to particularly think about the price of everyday goods (there are now up to 70% of the population in Russia), the key is only the perceived value of the product, and not its price (pricing criteria for durable goods will be discussed below) .
Price is the amount of money that consumers must pay to receive a product. Helen Curtis offers retail and wholesale prices, preferential prices and discounts, sale on credit. The price charged by the firm must match the perceived value of the offer, or buyers will buy competitors' products.
Value, in relation to quality, is a relative concept. The consumer compares the organization's products with the products of its competitors, other goods or services that satisfy the same needs, or with the products of the same organization in the past. Consumers are by no means objective in determining value. An important role is played by the nature of perception, which is influenced by such intangible factors as, for example, image, reputation in society. The value of Mercedes, for example, can be considered high, judging by the steady growth in the popularity of this car, although objectively speaking, it specifications and the service life is lower than some other less expensive but luxurious cars. Perceived quality can actually raise the objective value of a product. Because of the perceived value of a Mercedes, for example, the sale price of a used Mercedes car is a higher percentage of the original price than the average of other car brands. The reputation of poor quality that American automakers have unfortunately gained is very difficult to break, despite the most significant improvements in the quality characteristics of their products.
It is very important that the perceived value is always slightly higher than the current price in order to stimulate buyer greed. If the price is higher than the perceived value, but the buyer is forced to buy the product out of necessity, this creates severe problems for the seller in the future, as he receives a negative charge in the mind of the buyer.
The charges of functional goods are usually proportional to the degree to which they perform a function. For example, if a regular battery lasts 10 hours and costs $1, then a new battery with 20 hours will be worth $2. If a 12-sheet notebook costs 3 rubles, then a 24-sheet notebook will receive a perceived value of 6 rubles.
In a highly competitive environment, an increasing number of enterprises (companies) set prices based on perceived value. The key to pricing in this case is the buyer's perception of value, not the seller's cost. Value-based pricing means that the seller cannot design a product and develop a marketing program before a price is set for it.
Once again, the key to success in marketing is the ability to outperform the value proposition offered by competitors. Consumers make purchasing decisions based on a comparison of the values offered by suppliers. After a product is purchased, the level of consumer satisfaction depends on the balance between its perceived merits and the buyer's expectations. The consumer experiences satisfaction when the perceived properties of the product meet or exceed his expectations. Expectations are formed from the experience of previous purchases or communication with other people, and may also be the result of the supplier's marketing activities. Companies should avoid the fallacy of setting consumer expectations high with claims that exaggerate the product and are designed to promote sales. This can lead to consumer dissatisfaction, especially if the quality of the purchased product is far from expected.
Functional value - the perceived usefulness of a product, due to its ability to play a functional or physical role.
Emotional value is the perceived usefulness of a product, due to its ability to
PRICE - 1. The amount of money that consumers must pay to receive the goods. The price charged by the firm must match the perceived value of the offer, or buyers will buy competitors' products. There are several types of pricing: basic, reference, nominal, textured, solid, sliding, followed by fixing, wholesale, retail, etc. .
In the next phase of brand development, positioning and advertising, vendors face greater challenges. Culture, beliefs, economics and language different countries influence the perceived value of the brand and make it difficult to unify the brand, the degree of which is determined by a particular product and market. National values and traditions are most influential in the field of food and minimal in electronics. Cultural values matter least to young people and have the greatest impact on older people and low-income consumers. Decisions made during the sales, promotion and distribution phases are inevitably local, as all markets are different. In general, when creating global brands, the question arises of the degree of similarity and difference between markets. Very few brands, if any, are identified in the countries of one region (let alone globally) in the same way, but many of them have characteristics that can be standardized across multiple regions.
Perceived value. Do customers feel that the offered price reflects the value of the product?
If a company does not update its product lines for a long time, the pressure on its prices will constantly increase. Usually, buyers look forward to the fact that, as a result of the interactions of supply and demand, the real prices of the goods will decrease. The only way to keep prices and profits at the same level for a long time - constant changes within the company and innovation to offer customers a product with increasing perceived value.
The concept of marketing is the heart of the free enterprise system. In an economy built on the principles of competition, buyers have the opportunity to choose between goods various companies. Consumers purchase goods of those of them, the offer of which, in the opinion of buyers, has the highest value. The value of a product is a function of perceived value and
More than 35 years ago, Peter Drucker argued that the first task of any company is to consumer creation. But the modern consumer finds himself face to face with ranks of lined up products, brands, manufacturers, prices, and suppliers. On what basis does the consumer make his choice?
In our opinion, the consumer first of all determines the acceptance of which offer will bring him the maximum value? He is focused on maximizing value within the acceptable costs of finding a product, limited knowledge, mobility and income level. The consumer develops an expectation of a certain value, on the basis of which he acts. It is on whether the offer of the manufacturer corresponds to the expected value of the consumer that determines the degree of satisfaction of the latter and the likelihood of him making a repeat purchase.
Value for the consumer
We assume that the buyer goes to the company whose product he expects to have the highest value.
The value (cost) perceived by the consumer, is defined as the difference between the total value of a product for the consumer and its total costs. Total value for the consumer- the totality of benefits that he expects to receive by purchasing a product or service. Total cost to the consumer defined as the sum of the costs that a consumer expects to incur in evaluating, obtaining and using a product or service.
In this case, a simple example will help us. Suppose the buyer, a large construction company, is about to purchase a tractor from either Caterpillar or Komatsu. Competing sellers offer their carefully considered offers to the potential consumer.
The buyer thought out in advance where he was going to use the new tractor: at construction work outside the city. He would like the tractor to have a certain level of reliability, durability and good performance. The buyer evaluates the offers received and, based on the data on each tractor, comes to the conclusion that Caterpillar has the greatest value for him. At the same time, the consumer considers the conditions and related services - delivery times, personnel training, repair services - and decides that Caterpillar provides best service. In addition, the buyer finds that Caterpillar's staff is more professional and flexible in meeting customer needs. Finally, he appreciates Caterpillar's overall corporate image. Summing up the expected value product, services, personnel and image, the customer is assured that Caterpillar offers maximum total value.
Does this mean that he will buy a tractor from this particular company? Not at all necessary. In making the final decision, the buyer will certainly take into account the total costs associated with acquiring Caterpillar versus Komatsu equipment. The buyer's total cost includes more than just cash costs. As Adam Smith noted more than two centuries ago, "the real price of any thing is the temptation and at the same time the fear of possessing it." Total costs to the consumer, except cash costs include waste of time, energy and emotions. When summing up all types of costs, a picture of the total costs of the consumer is formed.
After determining the individual types of costs, the buyer evaluates how the total costs of acquiring Caterpillar and Komatsu tractors correlate with the total value for the consumer of each of them. It is most likely that he will decide to buy the equipment whose manufacturer offers the highest felt consumer cost.
Now consider whether a company can take advantage of this theory of customer decision making? Caterpillar has the ability to add value to its customer offering in three ways. Firstly, increasing the overall value of the product for the consumer, improving its technical characteristics, raising the level of services, staff qualifications and corporate image. Secondly, it has the ability to reduce the costs of the buyer, helping to save his time, energy and emotional costs. Thirdly, the company can reduce the consumer's monetary costs, i.e., reduce the price of the product.
Assume that Caterpillar has concluded that the buyer will definitely consider an offer that has a value of $20,000. Further, suppose Caterpillar's cost to manufacture the tractor is $14,000. Therefore, the company expects the difference between the value of the product and the cost to be $6,000. ($20k minus $14k).
This means that Caterpillar has the ability to vary the price in the range from $14,000 to $20,000. Otherwise, the company will either not cover its costs (the price is less than $14,000), or it will be squeezed out of the market (the price is more than $20,000). The price that Caterpillar charges determines the perceived value and profit of the manufacturer. For example, if Caterpillar sets the price of a tractor at $19,000, the consumer's perceived value will increase by $1,000 and the supplier's profit will be $5,000. purchase of products from this manufacturer.
As Caterpillar seeks to win the battle for the consumer, it must offer more perceived value than Komatsu. Consumer perceived value can be measured either as the difference between total value and total cost, or as a ratio between the two. If the total value of the tractor to the consumer is $20,000 and its total cost is $16,000, the consumer's perceived value is $4,000 (measured as a difference) or 1.25 (measured as a ratio). The ratio of total value to total cost used by the consumer to compare different offerings is often referred to as value/price ratio.
Some marketers may argue that our proposed theory of choice is too rational. Their judgments are based on examples where buyers make a choice not in favor of the product with the highest perceived value to the consumer. Let's imagine the following situation. The Caterpillar salesperson reassures the purchasing agent that, given the price and performance benefits (fuel savings and high product reliability), the Caterpillar tractor delivers the highest perceived value to the consumer. And yet the buyer decides to buy a Komatsu tractor.
How can we explain this consumer-company behavior? There are three options:
- 1. The buyer's purchasing agent has an order to buy at the lowest price. This means that his choice is not based on the amount of perceived value. Therefore, the Caterpillar seller must try to convince the buyer's management that a purchase decision based on the price of the item alone will lead to lower profits in the long run.
- 2. When the construction company realizes that a Komatsu tractor (including operating costs) is more expensive than a Caterpillar tractor, the purchasing agent will have already retired. His calculation was to create a favorable image for the coming period. The purchasing agent sought to maximize personal gain, leaving aside the interests of the company. The task of the seller is the same as in option 1.
- 3. The purchasing agent has a long-term friendly relationship with the salesperson of Komatsu. In this case, the Caterpillar seller needs to show the buyer that buying a competitor's tractor will result in dissatisfied end users, who will inevitably find too high fuel consumption and low reliability of the purchased equipment.
In all the cases we have considered, the purchasing agent has acted within various constraints, and his choice was based on the maximization of personal benefits; the interests of employers were not taken into account. Yet the concept of maximizing customer perceived value is a very useful one, applicable to different situations and a scheme that brings good dividends. You can use it in the following way. Firstly, The seller must estimate the total cost and the total cost to the consumer associated with each competitor's offer and compare it with their own offer. Secondly, a seller whose offer has no tangible advantage has two alternative options actions. It can either increase the overall value of the product for the customer, or reduce the overall cost of the latter. The first requires improving the quality of products, services, staff qualifications and improving the corporate image. The second involves reducing the price, simplifying the process of ordering and delivering products, or taking on some of the risks of the consumer by providing a guarantee.
Edition: Marketing management. 11th ed.
Chapter 3
Product value, customer satisfaction and customer loyalty
Competition between companies is becoming increasingly fierce. In ch. 1, we came to the conclusion that the key to the success of a manufacturing company in the competition is its appeal to the philosophy of marketing. This idea was well formulated by the CEO of Cisco Systems John Chambers: "The customer should become the center of your corporate culture." In ch. 2, we have demonstrated the need for a speedy transition to the rails of the new economy, building up a competitive advantage with the help of the Internet, wireless and other technologies.
In this chapter, we will discuss in detail the methods that allow a company to outperform its competitors. How? The answer is obvious: it is necessary to satisfy the needs of consumers in the best possible way. Companies that focus on the consumer are able not only to produce goods, but also to influence the formation of customer needs, using knowledge of production technologies and the creation of market structures.
Many companies believe that the job of attracting customers is left entirely to the marketing and / or sales department. If the specialists do not cope with the task, the leaders of such firms believe that the reason for the fiasco is the lack of the necessary qualifications of employees. In fact, marketing is just one of many factors in attracting and retaining customers. The best marketing department in the world is not able to sell low-quality or useless products. The activity of the marketing department is effective only in those companies in which every department and every employee creates and translates into reality a competitive, advanced system of providing consumers with high-quality goods.
Let's take McDonald's as an example. Every day, about 45 million people in 121 countries visit 29 thousand of its restaurants. And not because they are crazy about hamburgers. Some other fast food restaurants serve more sophisticated dishes. But visitors are attracted to the service system as a whole, and McDonald's knows the secret of the system for maintaining its high standards in every institution, wherever it is located. The "secret weapon" is hidden under the abbreviation KSChTS - quality, service, purity and value. McDonald's is only effective to the extent that it is committed to delivering value to its suppliers, franchisors, employees, and most importantly, its restaurant patrons.
In this chapter, we will look at the philosophy of a consumer-oriented firm and value marketing.
PRODUCT VALUE AND CUSTOMER SATISFACTION
More than 38 years ago, Peter Drucker argued that the first task of any company is to create a customer. But the modern consumer finds himself face to face with ranks of battle-formed products, brands, manufacturers, prices, and suppliers. On what basis does the consumer make his choice?
In our opinion, the consumer is primarily looking for an answer to the question, accepting the offer of which supplier will bring him the maximum value? We mean that he is focused on maximizing value within the acceptable costs of finding a product, limited knowledge, mobility and income level. The consumer develops an expectation of a certain value of the product (service), on the basis of which he acts. It is on whether the manufacturer's offer corresponds to the expected value of the consumer that determines the degree of satisfaction of the latter and the likelihood of him making a repeat purchase.
PERCEPTED VALUE FOR THE CUSTOMER
We assume that the buyer goes to the company whose product, as he expects, has the highest value (Fig. 3.1). Consumer perceived value (cost) is defined as the difference between the total value of the offer for the consumer and its total costs. Total value for the consumer- the perceived monetary value of the set of economic, functional and psychological benefits that he expects to receive by acquiring this market supply. Total consumption costs defined as the sum of the costs that the buyer expects to incur in evaluating, obtaining and using the offer.
Let's take a simple example. Suppose the buyer, a large construction company, is about to purchase a tractor from either Caterpillar or Komatsu Corporation. Competing suppliers offer their carefully considered offers to the potential consumer.
The buyer company plans to use the new tractor in construction work and would like it to have a certain level of reliability, durability and good technical characteristics. The construction company evaluates the proposals received and, based on the data on each tractor, concludes that the Caterpillar tractor has the greatest value for it. At the same time, a potential consumer considers the terms of purchase and a set of related services - delivery times, staff training, repair services - and decides that the American manufacturer also provides the best service. In addition, the buyer finds that Caterpillar's staff is more professional and flexible in meeting customer needs. Finally, he has a higher appreciation for the overall corporate image of a US company. By summing up the expected value of the product, services, people and image, the customer is convinced that Caterpillar is offering the maximum total value.
Does this mean that the construction company will purchase a tractor from this particular supplier? Far from it. In making the final decision, the buyer will certainly take into account the total costs associated with acquiring Caterpillar equipment in comparison with Komatsu. The buyer's total cost includes more than just cash costs. As Adam Smith noted more than two centuries ago, "the real price of any thing is the temptation and at the same time the fear of possessing it." The total costs of the consumer, in addition to monetary costs, include the costs of time, energy and emotions. When summing up all types of costs, a picture of the total costs of the consumer is formed.
After determining the individual types of costs, the buyer evaluates how the total costs of acquiring Caterpillar and Komatsu tractors compare with the total value for the consumer of each of the models. It is most likely that he will decide to buy the equipment whose manufacturer offers the highest perceived value to the consumer.
Now consider whether a company can take advantage of this theory of customer decision making? A US company can add value to its offering in three ways. First, by increasing the overall value of the product for the consumer, improving its technical characteristics, improving the level of services, staff qualifications and corporate image. Secondly, it has the ability to reduce the costs of the buyer, helping to save his time, energy and emotional costs. Thirdly, the company can reduce the consumer's monetary costs, that is, reduce the price of the product.
Assume that Caterpillar has concluded that the buyer will definitely consider an offer with a value of $20,000. Assume that the cost of producing a tractor is $14,000. Therefore, the company calculates that the difference between the value of the product and the costs will be $6,000 ($20,000). minus $14 thousand).
This means that Caterpillar has the ability to vary the price of its model in the range from $14,000 to $20,000. Otherwise, the company will either not cover the costs (price less than $14,000) or be squeezed out of the market (price over $20,000).
The price that Caterpillar charges determines the perceived value to the customer and the manufacturer's profit. For example, if Caterpillar sets the price of a tractor at $19,000, the consumer's perceived value will increase by $1,000 and the supplier's profit will be $5,000. purchase of products from this manufacturer. As the American company seeks to win the battle for the consumer, it must offer more perceived value than Komatsu.
Some marketers may argue that our proposed theory of choice is overly rational. Their judgments are based on examples where buyers do not choose the product with the highest perceived value to the consumer (when, despite our calculations, the buyer opts for a Komatsu tractor).
How can we explain this consumer-company behavior? There are three options:
- The purchasing specialist of the buying company has an instruction to purchase the tractor at the lowest price. This means that his choice is not based on the amount of perceived value. Therefore, the Caterpillar seller must try to convince the buying company's management that a purchase decision based on the price of the item alone is detrimental to the user's long-term profit.
- When the leadership construction company realizes that the Komatsu tractor (including operating costs) is more expensive than its competitor's model, the purchasing specialist will have retired. His calculation was to create a favorable impression of his activities with the company's management for the next period of time. The purchasing specialist sought to maximize personal gain, leaving aside the interests of the company. The task of the seller is the same as in option 1.
- The Purchasing Specialist has a long friendship with the Komatsu salesperson. In this case, the Caterpillar seller needs to show the buyer that acquiring a competitor's tractor will result in dissatisfied end users, who will inevitably find too high fuel consumption and low reliability of the purchased equipment.
TOTAL CUSTOMER SATISFACTION
The degree of consumer satisfaction with a purchase is determined by the ratio of his expectations to the actual qualities of the purchased product. Generally speaking, satisfaction- this is a feeling of pleasure or a feeling of disappointment that occurs in an individual who compares his preliminary expectations and the real qualities of the purchased product (or result). If the actual performance of the product turned out to be lower than the preliminary expectations, the consumer feels disappointed. If the characteristics of the product match the expectations, the product is satisfied. If the product's performance is better than imagined, the customer's satisfaction level is even higher, in other words, he is absolutely satisfied.
There is no direct relationship between customer satisfaction and customer loyalty. Suppose customer satisfaction is rated on a scale from 1 to 5. With a very low level of satisfaction (1), customers will most likely refuse the company's services and certainly will not recommend it to their acquaintances. At an intermediate level of satisfaction (2-4), buyers are very satisfied with the company, but at the same time they are inclined to more attractive competitive offers. With the highest level of satisfaction (5), the chances of a repeat purchase and good reviews about the company are high. A high degree of satisfaction or admiration for a company creates not just a rational preference, but an emotional connection with the company or its brand. According to Xerox, a "totally satisfied" customer over the next 18 months is six times more likely to make a repeat purchase than a "very satisfied" customer.
Consumer expectations. How are consumer expectations formed? An important role in this process is played by the individual's previous shopping experience, advice from friends and colleagues, information received from active market participants, competitors, and perspective assessment. If supplier information leads to inflated expectations, it is most likely that the buyer who is seduced by advertising will be disappointed. For example, a few years ago, the Holiday Inn hotel chain ran a campaign called "No surprises." However, the number of problems faced by its customers did not decrease, and management was forced to abandon this idea. If a company sets expectations too low, it will not be able to attract enough customers (despite the fact that the actual quality of the product will exceed consumer expectations).
Today, some of the most successful companies succeed in raising consumer expectations while delivering consistent product quality.
The goal of such companies is complete customer satisfaction. For example, Xerox provides a “Total Satisfaction” guarantee and within three years of purchase, Xerox will, at its own expense, replace any equipment that is not to the customer's satisfaction. Cigna's ads say, "We won't rest until you're completely satisfied," while Honda says, "One of the reasons our customer is always happy is our dissatisfaction." Nissan is inviting potential Infiniti buyers to visit its dealers for a "guest ride" (not to be confused with "test drive"), as the Japanese word for a consumer is "respected guest."
Let's look at what high customer satisfaction can bring to a company.
Saturn. In 2000, Saturn (one of the new divisions of General Motors) invited all owners of cars manufactured by the division to take part in a celebration dedicated to the 10th anniversary of its formation. More than 40,000 Saturn owners from all over the United States came to the company's headquarters in Spring Hill, Tennessee to participate in the celebrations. The Saturn customer loyalty rate exceeds 60%, while the industry average does not even reach 40%.
The buyer's decision to "stay true" to a given brand or "betray" depends on a thousand little things in the relationship between him and the company. And in order for all these little things to serve to increase customer loyalty, a company must enrich its experience with consumers.
Joe de Vivre. Joe de Vivre Hospitality Inc. owns a chain of small hotels, restaurants and resorts in San Francisco and suburbs. Each institution of the company is made in the style of one of the popular magazines. For example, the Hotel del Sol, a refurbished yellow motel surrounded by palm trees adorned with electric bulbs, is presented as nothing more than a meeting between Martha Stewart Living and Islands magazines. In two hotels in Silicon Valley, guests are offered high-speed Internet access, not only in the rooms, but even in the pool. The concept of a boutique hotel involves a personal approach to the client. For example, vitamins can be found under the pillow instead of traditional chocolate. The Joe de Vivre hotel chain is the largest in the California resort area.
Delivering high value to the consumer. The key point in the formation of consumer loyalty is the high value of the product for the consumer. According to Michel Lanning, each supplier company should strive to offer the highest possible value to a specific market segment and create the best value delivery system.
value proposition consists of a number of benefits promised by the company and has much greater value than positioning based on one of the product attributes. For example, Volvo cars are marketed as "safe" but the buyer is promised much more than just a safe car. It is also a machine that will last a long time, is accompanied by good service, has a long warranty. In essence, the proposal determines the formation of the resulting opinion of the buyer and his subsequent attitude towards the supplier. The trademark must guarantee the consumer that he will receive everything promised to him by the manufacturer. And the extent to which the promises of the company and the characteristics of the real product (service) coincide is determined by its ability to manage value creation and transfer system, including all communications and channels that provide services to the consumer.
As Simon Knox and Stan Maclan point out, many companies "suffer" from a value gap (between brand value and consumer value). Many vendors seek to make their brand stand out from the crowd through slogans (“Wash it white”), unique selling propositions (“Mars Bar helps you at work, play and play”), or augment the base offer with additional service (“At your request, the hotel will provide you with a computer”). The marketers of these companies focus on developing the brand, rather than conveying the value of the product. Will the consumer receive everything promised? The answer depends on the supplier's ability to influence various core business processes. According to S. Knox and S. Maclan, marketers should pay no less attention to key business processes than to developing a brand profile. Let's talk about one company that has mastered the art of delivering value to its customers.
Superquinn. Superquinn is Ireland's largest supermarket chain, led by Feargal Quinn, one of Ireland's top marketers. Store employees greet customers and help them navigate the trading floors, give out umbrellas in case of rain, drive carts with groceries to the car, and even offer them coffee. In the trading floor itself, not just anyone, but the managers of the relevant departments are ready to answer the questions of buyers. Every supermarket has an excellent salad bar, fresh bread is baked every four hours, and it indicates when fruits and vegetables are on sale (and photographs of farmers are displayed nearby). Needless to say, there are special children's rooms in Superquinn stores? In the customer loyalty program, points are awarded not only for the volume of purchases, but also for the detection of low-quality goods, such as crumpled cans or spoiled tomatoes. Map regular customer Superquinn is accepted by a dozen other businesses (bank, gas station, etc.) where the owner also earns reward points. Because everything Superquinn does exceeds consumer expectations, the company has an almost cult status for its fans.
In addition to working to ensure that the company's products meet expectations and satisfy consumers, the company must not lose sight of competitors. For example, a company whose management found that 80% of its customers express satisfaction with its activities is in seventh heaven. Suddenly, the CEO learned that his leading competitor had a 90% customer satisfaction rate. He will feel even more concerned when he learns that competitors have set a goal to increase customer satisfaction by another 5%.
In table. 3.1 describes a set of methods that will help each company to monitor the degree of customer satisfaction.
For companies that consider customer satisfaction as the goal of their activities, customer satisfaction is both the main task and a marketing tool. Companies that achieve high levels of customer satisfaction want to make sure that these successes are known to the entire target market. For several years now, the Honda Accord has consistently ranked at the top of J.D. Powers' customer satisfaction ratings. Mention this fact in advertising for Honda contributed to a noticeable increase in sales of its cars. The rise of Dell Computer (personal computer manufacturer) was partly facilitated by its first place in the customer satisfaction rankings and the correspondingly built advertising campaign. (For more on Dell Computer's work with consumers, see Marketing Inside Dell Computer and Connecting with Consumers.)
Satisfaction rating. However, the desire of the supplier company for a high degree of customer satisfaction does not mean that this is the main goal for management.
Firstly, Customer satisfaction increases when a company lowers product prices or improves customer service, which, other things being equal, leads to a decrease in the rate and mass of profit. Secondly, the company is able to increase profitability in other ways, in addition to increasing the degree of customer satisfaction, by methods (modernization of the production process, additional investments in research and development). Thirdly, the company deals with a range of interest groups: employees, dealers, suppliers and shareholders. A change in the direction of the resource flow in favor of consumers can cause dissatisfaction with "deprived" groups. The philosophy of the company should be to achieve, within the limits of available resources, a high level of customer satisfaction and compliance with the requirements of interest groups.
If consumers evaluate the degree of satisfaction with one of the elements of the company's activities (say, supply chain), management must be aware that the approach of customers to its quality is purely individual. For a specific customer, satisfaction may be related to the speed of delivery, its timeliness, the completeness of documenting the order, etc. its inherent character traits, individual life orientation, etc. One will be satisfied with a relatively low level of service, the other will not like “bird's milk”.
To assess the perceived level of satisfaction of American buyers with the activities of various firms, industries, sectors of the economy and national economy in general, Clayse Fornell developed a special index (American Customer Satisfaction Index, ACSI). In 2001, the highest ACSI index had: H. J. Heinz Company (89), Colgate-Palmolive (85), Cadillac (88) and Dell (78).
Today, the issue of consumer satisfaction is even more acute. The fact is that with the development of the Internet, opinions about companies, both good and bad, can spread incredibly quickly.
THE NATURE OF GREAT BUSINESS PERFORMANCE
Some companies successfully overcome all these difficulties, they manage not only to fully satisfy the needs of consumers, but also to achieve high consumer value for their products. We will call such organizations highly productive. Arthur D. Little, a consulting firm, developed model characteristics of a high-performing business that included four key success factors: stakeholders, workflows, resources, and organization.
STAKEHOLDERS
The first step on the path to a high-performing business is to identify the circle of groups interested in the company's activities and their needs. As a rule, most enterprises are guided by the interests of shareholders. However, modern companies are beginning to realize that ignoring the interests of other interested groups (customers, employees, suppliers, distributors) by management is fraught with a reduction in shareholder dividends.
Every company should strive to meet the minimum expectations of each stakeholder group. For example, a company may show special attention to customers, treat employees with care, and provide a threshold level of supplier satisfaction. The main thing is not to offend the sense of justice of representatives of various interested groups, which interact very dynamically.
When a company sets high standards for employee satisfaction, it incentivizes them to continually improve service levels and introduce innovative production methods. As a result, the quality of products and services improves, which means that the desires of consumers are fulfilled. This, in turn, stimulates high rates of production and profit growth, which means meeting the needs of shareholders. The positive reaction of the company's shareholders completes the cycle and improves the working conditions of its employees.
PROCESSES
Optimal conditions for interest groups are created by managing interconnected workflows. Today, high-performing companies are rapidly reorienting themselves to focus on managing core business processes such as product innovation, sales promotion, and order fulfillment. During workflow reengineering, cross-functional teams are created that are responsible for each specific business process.
For example, at Xerox, the account team coordinates sales, shipping, equipment installation, service, and accounting, ensuring the continuity of the entire process. Companies that effectively manage core business processes win the competition. Here's what researchers at the McKinsey consulting firm say:
High-performing companies, in contrast to their less successful rivals, emphasize a certain set of skills. They give credit to cross-functional relationships, while other companies simply pride themselves on the power of functional teams. The first ones say: “We have the best managers in the world”, and the second ones answer: “And we have the best organizers of cross-functional relations”.
AT&T, Polaroid, Motorola are some of the companies that work with cross-functional teams. Groups of this kind have become commonplace in non-profit organizations and government structures.
San Diego Zoo. The new mission of the San Diego Zoo and the reorientation towards educational purposes led to a change in its entire structure. The modernized zoo is divided into climatic zones, which represent the flora and fauna of different parts of the world, predators and their potential victims in their natural environment. Changing the concept of animal display required the intensification of plant specialists and animal care experts, the "liquidation" of traditional boundaries between them.
RESOURCES
Business processes are the productive consumption of resources - labor, materials, equipment, information, energy, etc. A company can use both its own and borrowed resources. As a rule, firms operate mainly with their own resources, but an analysis of their activities shows that this practice is far from always effective. Today, many companies often turn to external sources of resources that are least essential to their operations, especially if they can obtain higher quality raw materials at relatively low prices. Typically, these external resources include cleaning services, transportation services, etc. Not long ago, Kodak transferred control of the data processing department to IBM. Here are two more examples of successful outsourcing.
Palm Computing. Donna Dubinsky, president of Palm Computing, said her company outsources everything they can do better and cheaper. The objects of outsourcing are production, logistics, after-sales service, technical support for customers. The company's staff consists of a group of talented developers, inventors and engineers, as well as a leadership team that manages the entire outsourcing infrastructure.
Topsy tail. Tomima Edmark, the inventor of the Topsy-Tail elastic curler, who has a staff of 2, managed to increase her company's sales to $ 80 million in 1993. T. Edmark and two of her employees coordinate the work of 20 independent companies that carry out the entire range of works and services. Topsy-Tail's CEO always adheres to the golden rule of outsourcing: she controls new product development and marketing strategy - core functions, the heart of her company.
Thus, the main task of the company is to maintain and develop the main areas of activity and its own resources that make up the core, core, core of a particular business. For example, shoes Nike produced in Asian factories that are extremely competent in the field of tailoring. However, Nike holds the lead in shoe design and distribution, two of the company's core businesses. Core competencies, the core of the company, the core of its business, to a large extent determine the benefits of the company's goods and services perceived by consumers, which means that they are the source of its competitive advantages, they contain the potential for the company's development, they cannot be reproduced by competitors.
Another source of a firm's competitive advantage is its distinctive capabilities. While core competencies are related to the scope of specific technical skills and experience, distinctive abilities firms characterize rather its possibilities of expansion of business processes. For example, the retailer Wal-Mart has a unique ability to present a variety of products in its department stores based on several core competencies (in particular, the design of information systems and logistics). According to Professor George Day, market-oriented organizations are distinguished from all others by three distinctive abilities - a sense of the market, proximity to customers and relationships with channels.
Ultimately, a company's competitive advantage depends on how well it manages to "fit" its core competencies and distinctive capabilities into a complex "functional system." Southwest Airlines, Dell or IKEA are hard to imitate precisely because copying them functional systems almost impossible.
ORGANIZATION AND ORGANIZATIONAL CULTURE
Every company has organization, characterized by a certain structure, policy and corporate culture. As a result of rapid changes in the external business environment, from time to time each of these elements ceases to correspond to new external conditions. If the structure and policy are difficult but amenable to transformation, then the culture of the company is an extremely inert system of relations. At the same time, it is the change in the corporate culture that is the condition for the successful implementation of the new strategy. What is corporate culture? Majority business people it is unlikely that they will be able to clearly articulate this amorphous concept, which some understand as "the exchange of experiences, stories, traditions and practices that characterize the organization." At the same time, the first thing you encounter upon entering a company is manifestations of the corporate culture: the style of employees' clothing, the way they communicate with each other and customers, and the design of offices. Even in those companies that, it would seem, do not think at all about some kind of “mythical” culture, it can be expressed very clearly.
Quite often corporate culture develops naturally when employees of the company reproduce the manners and behavior of the leader. This is what happened with Microsoft, for example, when the giant company still retains the original culture, a huge contribution to the formation of which was made by its founder Bill Gates. It seems that it was a high, uncompetitive culture that turned out to be the key to Microsoft's success and helped the company to take a dominant position in the computer industry.
Microsoft. Don't be fooled by the low-rise buildings, chic lawns, and casual dressing of the staff, reminiscent of a student camp. In reality, the employees of the company are constantly fierce competition under the slogan "take no prisoners" (which bears the imprint of the personality of William Gates himself). Competitors from Silicon Valley, referring to the reckless devotion of Microsoft employees to their company, call them "microsurfers" ("microserfers", serf - serf, slave). Like W. Gates, who founded the company when he was just a boy, Microsoft employees are quite young: about a third of them are under 29 years old, and average age employees of the company - 34 years. Their free manner of dressing also comes from Gates: after a night of debugging programs, he could well fall asleep on the garage floor, and immediately get to work the next morning. Many of the employees, thanks to their stock options, are simply “basking in the money,” although looking at their worn T-shirts you can’t tell. Part of the zeal stems from the need to maintain a high market value for stocks with exchange ratios of 35 or more, twice those of Standard & Poor's 500 companies. The company's employees own 38% of its shares, and in terms of the number of millionaires working in the state, Microsoft significantly outnumbers any other organization.
What happens when entrepreneurial companies grow out of "baby pants" and there is a need to create a more rigid structure? What happens when a company with an entrepreneurial culture enters into a joint venture with an organization that adopts a bureaucratic management style based on a rigid hierarchy? According to Coopers & Lybrand's 1992 study of 100 failed mergers, 855 managers said differences in management styles and practices were a major factor in the failure.
DaimlerChrysler. Daimler-Benz AG and Chrysler Corp. merged in 1998 to form the single company DaimlerChrysler. The leaders of both companies hoped to extract huge synergies from the combination, which would turn DaimlerChrysler into a global automotive empire. However, fundamental differences in approaches to doing business already in the early stages of their existence new organization led to the dismissal of many senior managers, a drop in share prices, management restructuring, and even significant losses for the American partner. The management styles of both companies were strikingly different. While Daimler had a strong bureaucratic tradition, Chrysler traditionally delegated authority to junior managers. In 1999, a restructuring was carried out - the American division received greater autonomy, but the head of DaimlerChrysler, Jürgen Schremp, immediately added fuel to the fire, saying that he had always wanted to make Chrysler one of Daimler's divisions. The merger, which began as a global "merger of giants", turned into a disaster: Chrysler's losses continued to mount, and DaimlerChrysler's shares fell in price by more than half. In February 2001, the company announced the forced layoffs of 26,000 workers.
An analysis of such situations leads us to the conclusion that the corporate culture is closely intertwined with the company's strategy. Recently, J. Collins and J. Porras completed a six-year study to try to answer the question of how some companies manage to consistently maintain high production efficiency. The researchers identified two companies each in 18 industries, one of which was defined as "ideal" and the second as "comparative". The category of ideals were recognized industry leaders who won universal admiration, whose goals were not limited to making a profit. The ideal companies include General Electric, Hewlett-Packard and Boeing; to comparative companies - Westinghouse, Texas Instruments and McDonnell Douglas.
Trying to identify some common features for 18 market leaders, the authors came to the conclusion that the activities of each high-performing company are based on strict adherence to their own ideological norms. Thus, IBM throughout its history has followed the principles of respect for the individual, excellent customer service and continuous improvement in product quality. Johnson & Johnson believed its first responsibility was to fulfill its obligations to its customers, its second to its employees, its third to society, and its fourth to its shareholders. The second common feature of such companies is that their goals are global. Xerox is trying to improve "office efficiency", Monsanto is trying to "end world hunger". According to J. Collins and J. Porras, companies should avoid shifting core values, specific goals, and business strategies (see the marketing memo "Why do you exist and what are you fighting for?").
The third common feature of leading companies is that they plan for their future and follow the path of bringing their plans to life. For example, IBM intends to become a leader among network companies, and not just a major manufacturer of computer equipment.
Leading companies should also take care of new views on the formation of strategies. The traditional approach is that the strategy is created at the top level of management and comes down from the top. Gary Hamel offers a different approach: fruitful ideas about strategy are born at the grassroots organizational structure who are usually not sufficiently involved in the process of creating strategies (young promising employees, employees remote from the company's headquarters, novice employees).8 And the task of senior managers is, in particular, to discover and promote new promising ideas. When choosing a strategy, one must take into account various options possible development of the situation scenario analysis, pioneered by Royal Dutch/Shell Group). Such an analysis includes an idea of the possible future of the firm and various assumptions about market development factors. When discussing each of the scenarios, managers must answer the question: “What will we do in this case?”, select the most likely scenario and track events that confirm or refute it.
So, high-performing companies must ensure the transfer of value to consumers and satisfy the needs of their customers. What is this process?
On the showcase are two books of the same content with a price tag of 1000 and 100 rubles. Their difference is in publishing and binding. Have you ever thought about the value of each of them?
The price here has nothing to do with the value they may (or may not) give you. “Price” and “value” are two single-root words, the difference between which, as practice shows, not everyone knows. Let's figure out what is the fundamental difference between these concepts and why the same thing can have a high price, but not have value. And vice versa.
Each item has its price and value.
Any product has a price, and it is expressed in quantitative terms. People set the price based on a range of factors, including its benefits, brand, specifications, uniqueness, look, and so on. A book can cost 400 or 50 rubles, a loaf of bread - 30 or 100 rubles, a laptop - 30,000 or 100,000 rubles, and so on. Price formation is one of the areas of economic importance of a product. Another thing is the value, which can not always be determined in numbers.
How to measure value
Value is the benefit of a particular product or service that the buyer will receive for the money spent.
It is not always possible to measure it quantitatively, and to understand this, let's look at two practical examples.
Example 1
The young entrepreneur wanted to increase his earnings in sales. To this end, he signed up for the seminar "How to sell twice as efficiently and increase your income in a month." The lesson cost him 3,000 rubles. After carefully listening to the teacher's speech and applying the knowledge gained in practice, the entrepreneur really increased his earnings. If last month he received 15,000, then after the seminar his income amounted to 30,000 rubles.
In the example, we clearly see that the value received is higher than the price spent on the seminar. That is, having spent 3,000 rubles once, the entrepreneur earned 15,000 more than usual, and it is highly likely that his income will increase in the future. The difference between price and value in this case is tangible in material terms: the cost of the seminar is 3,000 rubles, and its value is 15,000 rubles for 1 month.
Example 2
The woman had a severe toothache. At first, she got rid of the pain with the help of drugs, but soon the pain became so acute that the drugs could hardly suppress them. Then the woman went to the dentist and cured her bad tooth, which cost her 1,000 rubles.
After the manipulations performed by the dentist, the pain completely receded - this is the value that the woman received by spending 1000 rubles on dental services. As you can see, it is hardly possible to measure it in numbers in the above case.
Value is an individual concept
Almost everything in our life has a price and value, but the latter concept is individual for everyone. For example, the aforementioned seminar is valuable for anyone involved in sales. But what is the point of visiting it for people who are not connected with this area? The same can be said about dental services: they are not needed for a person who does not have problems with his teeth.
As for the example with a book for 100 or 1000 rubles, it all depends again on the situation. If it is important for you to read it and gain valuable information for you, it makes no sense to overpay for the cover, and you will purchase the book for 100 rubles. However, if close person buys you a book in a more expensive binding, then the value of the information will be complemented for you by the value of a gift from a loved one.
Therefore, before ordering any product or service, you need to decide whether there is value in it specifically for you. To do this, ask yourself a few questions:
- Will my life change for the better after purchasing a product/ordering a service?
- Will I regret the purchase, or vice versa - will I regret that it was not carried out?
- me now and what will it bring in the future?
- Is the value higher than the price of the service / product, or vice versa - is the product not worth the money spent on it?
Value as a non-verbal weapon of persuasion and sales
Almost every business is related to sales in one way or another, so the information below will be useful for 99% of the people who read it. You can use the value of a product to convince a person to take an action or to sell them your product or service.
The classic mistake of all sellers is that they voice the price of the product, talk about its advantages and characteristics, but forget to mention the value. Why would a customer buy a product if he doesn't know what he needs it for? A similar situation occurs in real life: you can convince the interlocutor to do something, but until the person sees what value his actions will bring to him personally, he is unlikely to rush to fulfill your request. By focusing on the values and benefits of a product, service, action, you can skillfully influence any person.
By identifying the difference between price and value, and learning how to use this information, salespeople can artificially increase the value of a product/product based on the personal values of consumers. It makes no sense for buyers to buy expensive goods that have no value for them. This is the idea of choice. Buy the most valuable thing for you, regardless of the cost of this product. You can spend 10,000 rubles on a new bag, and on self-education, and on a gift to your loved one, and on anything else that is of value to you. It is important to approach this process consciously and to distinguish the imposed values from the true ones.
Price is the only element of mix marketing (product - price - place - promotion) that generates profit, the rest determine costs. The price of a product consists of the cost price (all costs for the manufacture of the product) and the added value.
Due to this allowance, the price can be significantly raised and thereby increase profits. The value of this premium is determined by the perceived value of the product for consumers. Buyers compare the merits of the purchase and the cost of it. When a product provides the best value-to-cost ratio, the customer makes the purchase.
The value is determined by the qualitative and quantitative characteristics of goods, or by the magnitude of the economic effect received by the consumer during the use of the goods (savings). This is what convinces the buyer to pay more for a particular product than for a similar competitor. Depending on the specifics of the product, the value can be expressed in:
availability of service (availability of components, consumables),
simplicity and ease of use, storage,
savings from use (less gasoline consumption), etc.
The perceived value of a product to a customer relies on a thorough knowledge and understanding of the end use of the product. A correct assessment of the value advantages and disadvantages of the product allows you to set the right price (not too high, which slows down trade and not too low, at which part of the possible profit is lost). To estimate what price the buyer is willing to pay, it is necessary to define and characterize various forms the satisfactions or services provided by the product, and the total cost of the purchase.
The economic value calculation method is implemented in the following procedure:
one). Determination of the price of indifference - determination of the price (or costs) associated with the use of that good (goods or technology) that the buyer is inclined to consider as the best of the alternatives actually available to him.
2). Definition of differences - definition of all parameters, cat. distinguish our product both for the better and for the worse from the alternative product.
3). Assessment of the significance of differences from the perspective of the buyer - an assessment of the value for the buyer of differences in the parameters of our product and the product-alternative (competitor).
four). Summation of the cost of indifference with the assessment of the positive and negative value of the differences between our product and the alternative product.
Perceived value is a product positioning tool (different from competitors' products) and a tool to increase profits by justifying a higher price.