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Introduction Marketing principles made a fast swift from the conventional methods to the modern marketing. From the literature, we can marked the shift from product centric view to customer centric view . i. e. from” inside-out to outside-in”. This made an outstanding shift from Mc Carty’s 4p concept to value based marketing. Emphasising this shift the Piercy(2009)imprint that marketing is a set of management activities that define ,create and deliver value to the customers.
The essay is divided into 3 section ,firstly about the creation and delivery of value ,in the second section deals with the case study of the Ritz Carlton and Abad group of hotels service orientation and recommendations and finally the critical evaluation of the concepts. Defining Of Value According to kotter and keller(2006) value is the central marketing concepts and can been seen as the identification ,creation ,communication ,delivery and monitoring of customer value. Value reflect the perceived tangible and intangible benefits and cost of the customer(zeithamal,1988).
In the view peck. etal(1999) customer value is the perceived benefits a customer believe they receive from the owner ship or consumption of a product or service relative to the ‘total ownership’. Some authors argued that value dwells in the balance between functional solution and sacrifice by the customers(Ravald,1996;Christopher,1996). Wooddruff(1997) noted that the value concept varies according to the circumstances of the customer’s. Moreover in the view of kotler (2009)the value creation and delivery has three phases first value choosing. i. e.
STP(segmentation, targeting, positioning). Secondly value providing through product development, offering and distributing and serving. Finally to value communicating through sales force ,advertising . Coming to 3vs approach of marketing( London’s business school) value is defining process like research on markets ,value is developing process like new product innovation, strategy development and selection of vendors . Finally to delivering value process such as advertising and distribution management The value creation cycle help us to understand different steps in the process of making benefit
According to kothari(2006),the key elements of value lies in products ,access ,experience and cost. The best company should understand the value the customer’s placed on this attributes ,but also quantify in terms of dollars also Product attributes Most of the industry now focused on the product attributes to maintain a competitive advantage . More than 90% of time concentrated on the inwards design of the products, instead of what the customer need(kothari&Lackner,2006 Access attributes Helps the accessibility of products and services to markets .
Organisation have to develop and understand different access requirement of each markets and customers, depending upon these organisation should have to deploy there resources to attain the customer’s requirements(kothari,2006) Experience attributes The overall experience of the customer by using the product and services of the organisation. Enterprise’s should have a close look base on the experience of the customer’s and should shape their brand based on the interaction between the customer’s in the many stages of the buy-pay-cycle . g: the brand value of Intel inside in the pc making customers. (kothari&Lackner,2006;walter,1999) Cost attributes Cost attributes is the main thing that builds value. These helps the organisation’s to communicate better value of its offering and also helps customer’s to make more economical purchase decision. (kothari&Lackner,2006) A complete understanding of these value drivers helps to effectively differentiate its total system value than its competitors’. Create and deliver value For creating value the enterprise should first understand the needs ,wants and demands of the customer’s.
Based on this they have to make offering for the satisfaction of the customers. Its true that a marketer rarely satisfy a mass market, so that they have to think strategically to divide market into segments. Based on the demographical, psychological and behavioural difference of the customers in the segments they select a target market for their offering and it is positioned . For example Volvo developed its cars for the customers ,whom safety is main concern. Offering is the intangible value proposition made physical. ( kotter and keller,2006;kolter,1997;Wilson etal. 1992) Value proposition is another main thing in creating customer value. It is the bundle of benefits the company offer’s in addition to the core positioning . Taking the example of the Volvo car its core positioning is safety, but in addition it promises a long lasting car, long warranty and service. So this can create a value in the mind of target customer who are concern in safety. ( kotter& keller,2006) Customer satisfaction is the main concern of creating value and competitive advantage(zeithaml,1988;parasuraman,1997).
Satisfaction is the feeling of pleasure or displeasure resulting from the comparison of products/services performance in relation to the expectations. Expectation comes from the past buying experience, friends or associates advice etc . The relation between expectation and performance decides the satisfaction ;whether it is high, medium or low. According to the literatures the two main wrong things usually the enterprises do in creating and delivering values are the supply chain focus on creating and delivering values. And the second is the internally focus usiness strategy, which are solely on the reduction of costs. Given no consideration to the customer’s needs and want. So the organisation should focus on the value chain aspects of the supply chain and also focus on the outside-in model instead of inside-out Fig:1 typical supply chain Fig-2:value chain model The above figures (1&2) illustrates the two models . Where in the typical supply chain ;the enterprises concentrate on the methods of production to the end customers . But is so less to create a value in customers from the modern concepts of marketing .
For creating a value and delivery the enterprises should first focus on the value flow from the demand of the customers . And base on strategic thinking they have to develop value on the each steps. And finally to the design of the product; based on the feedback of the demands. So the supply chain is more in customer focused and is aimed to outside in ,thus can create a value and delivery . More over the customer satisfaction resides value delivery networks of the enterprise. Customer need a just in time delivery of the products and services .
For that customer focus enterprises should be aware of the distribution channels of the products and services. They should maintain a deep relation ship between the buyers and suppliers. In Order to fulfil the value of the products and services. One example of the value delivery network is that of levis stratuss, its major retailer is sears. By the electronic data interchange, it can know the trends and stocks in the outlets and by co-ordinating with its suppliers levis can maintain its value than its competitor wrangler.
Michael porter proposed the value chain as a basic tool for identifying ways to create more customer value, its has nine strategic process ,five as 10(those below)&four as 20( those above). In creating value by the co-ordination of these activities Capture value Every enterprise have 3 pedals for capture shareholder value through(kothari&Lackner,2006) Customer profitability: economic value share that the enterprise capture for its shareholder form the total customer value Share of wallets:% of total customer spending that the enterprise can achieve Number of customers: enterprise market share
The value cube helps to assess the enterprise its performance at present and where to go in future in the total value space. Relationship between customer relationship management and value creation& delivery From the modern concept of value marketing the CRM has an positive effect in creating customer value(Wang etal. ,2004;peck etal,1999). By increasing the customer loyalty, customer’s retention and maximizing the customer life time value. The CRM is the process of managing the detailed information of the customer’s to maximize customer retention. The main steps of CRM are ???Finding out the prospects and customers On the basis of needs and value differentiate the customer ???Individual customer interaction to improve the knowledge about the customer and building relation ship ???Customization of product and services and messages to each customer CRM helps to develop loyalty of the customers . Loyalty is the deeply held commitment for rebuy a preferred products or services in future without switching behaviour. Which in turn increases the life time value of the customer . Sherden suggest that 20-80-30 rule ie:20%of life time customers generate 80% of firms profit of which 30% is loss serving unprofitable customers.
In addition to that CRM helps to attracts customers’ and retain customers . From the research it is clear that the amount for retaining the customers are less than capturing new customers . Here comes the notion of building loyalty among the customers by ???interacting with customers about the feedback of the value delivered eg :chicken of sea ???developing loyalty programs such as Frequency programs memberships programs ???personalizing marketing, using e-mails, websites ,call centres databases to foster continuous relationship ???creating institutional alliances
Thus through this relationship enterprises can crop partner’s ,advocate’s ,supporter’s ,and client’s helps to keep customers and prospect’s and purchaser’s(focused on catching customer’s). (peck etal. ,1999) Relation ship between TQM and value creation and delivery From many literature’s its clear about the synergistic relation of TQM and value process in marketing. TQM is a wide approach for organization to continuously improving the quality of processes ,products and service in the view of customer focus(Crosby,1979;juran,1988;slack etal. 2007). According to (shiba. etal,1993) TQM tools are useful for finding out the needs of the customers from which only an enterprise can make customer value and value proposition. TQM is bridge that link between what the customer wants and what the organisation does(Christopher etal,1991). According to Mele(2007) the TQM has a positive relationship in the entire process of creating and delivering customer value Comparison of Ritz-Carlton hotel with Abad group’s of hotels in the context of new marketing of value addition
The Ritz-Carlton hotel chain is famous through out the world due to its exceptional services and luxurious amenities. The customer centred approach of the hotel can be read from its motto” we are ladies and gentlemen serving ladies and gentlemen”. (www. ritzcarlton. com). Value proposition is their brand and exceptional services. They are giving employees training an average of 232hrs/year . In addition to that every day line-up sessions before starting the work to review the service techniques. Based on their golden rule to make employees delighted.
They focused on the employees empowerment and give extra recognition for employees performance. Hr recruitment policies also help a lot in the Ritz performance(www. ritzcarlton. com) Coming to the marketing activities ,the Ritz focused on “out side in ” and making necessary swift based on the customer needs ,want s and demands, by incorporating TQM in their value chain, to get just in time delivery of the values. In addition to that Ritz maintains “service quality index” daily to check the performance in services and problem encountered.
Using a database called CLASS(customer loyalty anticipation satisfaction system) to look the repeated customer needs and preference. Moreover the CARE system(clean and repair every thing)to ensure class service . All these activities are combined with CRM. Ritz value creation and delivery is recognized by the Malcolm Baldridge National Quality Award ,twice by any in hospitality industry. ( www. ritzcarlton. com) Coming to ABAD group of hotels, although their marketing strategy is customer focused, they are not up to the mark. Their services are not just in time of the needs and wants of the customers .
They are unable to capture a good relation ship with the customer in making them loyal and retention. (personal experience, www. abadhotels. com) Recommendations As you all know that sustaining in hospitality industry is difficult without value addition . ABAD have to make a close look at Ritz strategy for service and developing customer loyalty and then retention. From the literatures its clear about the customer life time value, in addition the cost of retaining customer is less than that for new customer. Action plans for ABAD should focus on out side in, from customers to inside process and should have to create a value chain based on the customer needs and wants based on their feedbacks ???they have to swift from selling concept to marketing concept ???try to make out good customer relationship ???use of data base system for monitoring services, and guest information ???try to add more value in their services, by giving a feature touch of brand in the mind of customers ???Use SIVA which i suggest to improve the performance of ABAD ,Siva means(Solutions, Information, Value & Access). shown below an integrated SIVA mix
Critical evaluation of the literature in my views piercy(2009) contend that marketing as bundles of values for customers here he ignore the role of other stake holders, concentrate his view only in customers. Marketing have an important role in creating value and delivering it to all its stake holder, not customers alone . if other stake holders are not enriched with value ,it is impossible to create and deliver value to customers. But in some literature I found that if customers are satisfied then every stakeholders are happy, but I think it is not the same .
Moreover marketing is not finish with value addition, it have to look both the internal and external factors of competition in order to achieve good market share. Conclusion As the people are more oriented towards quality ,speed ,reliability and durability, the marketing has swift from the selling concept to value creation concept for the satisfaction of all stake holders. From the above contents its clear that effective implementation of TQM and CRM will make a added advantage in the value creation and delivery of marketing References Christopher, M. (1996)From brand values to customer value.
Journal of Marketing Practice: Applied Marketing Science. 2(1),55-66. Christopher, M. , Payne, A. , Ballantyne, D. (1991) Relationship Marketing. Oxford: Butterworth-Heinemann. Crosby,P. B. (1979) Quality is Free. Newyork:McGraw-Hill Juran, J. M. (1988) Juran’s Quality Control Handbook. 4th ed. Newyork: McGraw-Hill Kolter,P. (1997) Marketing Management. 9th ed. Newjersey:Pearson Kothari,A. & Lackner,J. (2006) A Value Based Approach To Management. Journal Of Business And Industrial Marketing. 21(4), 234-249. Kotler,P. & Keller,L. (2006) Marketing Management. 12thed. Newjersey: Pearson Education Ltd
Kotler,P. (2009) A Framework For Marketing Management. 4th ed. Uppersaddle River:Pearson Mele,C. (2007)The Synergic Relationship Between TQM And MarketingIn Creating Customer Value. Managing Service Quality. 17(3),240-258. Parasuraman, A. (1997)Reflections On Gaining Competitive Advantage Through Customer Value. Journal Of The Academy Of Marketing Science. 25(2),154-161 Peck,H. ;Payne,A. ;Christopher,M. ;Clark,M. (1999)Relationship Marketing. Oxford:Butterworth Piercy. N(2009)Market-Led Strategic Change:Transforming The Process Of Going To Market. 4th Ed. London:Butterworth Ravald, A. Gronroos, C. (1996). The value concept and relationship marketing. European Journal of Marketing. 30(2),19-30 Ritz carlton hotels(2010)Ritz carlton website[online]http://www. ritzcarlton. com/en/Default. htm. [Accessed 20th August 2010] Shiba, S. ; Graham, A. ; Walden, D. (1993) A New American Tqm. Portland:Productivity Press . Slack, N. et al. (2007) Operations Management. 5th ed. Harlow: Prentice Hall Sutherland,J. ,D. (2004)keyconceptsinmarketing. Hampshire:palgrave Walters,D. (1999) Value-Based Marketing And Its Usefulness To Customers. Management Decision. 37(9),697-708. Wang Etal. 2004) An Integrated Framework For Customer Value And Customer Relationship Management Performance:A Customer Based Perspective From China. Managing Service Quality. 14(3),169-182 Wilson,R. ;Gilligan,C. ;Pearson,D. (1992)Strategic Marketing Manage ment. Oxford:Butterworth Woodruff, R. B. (1997)Customer value: the next source for competitive advantage. Journal of the Academy of Marketing Science. 25(2), 139-153. Zeithaml, V. A. (1988)Consumer Perceptions Of Price, Quality And Value: A Means-End Model And Synthesis Of Evidence. Journal Of Marketing. 52 ,21-22. Websites www. ritzcarlton. com www. abadhotels. com