Value Creation by the Focal Organization: of Expedia.com - Case Study Example

Case Study: Expedia.com BY YOU YOUR ACADEMIC ORGANIZATION HERE HERE HERE Case Study: Expedia.com III. Value Creation by the Focal Organization In the theoretical diagram known as the customer value funnel, the organization as level three provides value to customers in many different ways. Depending on the specific type of product or service being offered within these organizations, value will be defined by consumers by their own unique assessment system. However, in order to provide value, there must be a certain interdependency between stakeholders, business culture, and the organizational structure. A well-developed internal culture which is focused on meeting corporate goals and meeting with customer satisfaction expectations is one where interpersonal relationships are strong and where the staff members have a team-focused mentality. At the internal level, value is provided to customers by coordinating internal expertise and knowledge, making these meetings productive and goal-oriented, thereby producing a superior product. The internal dynamics of the organization is the foundation of providing value to customers. Expedia.com operates in an environment where the parent company is working with multiple brands in the online environment. In order to support these brands, the internal organizational culture and structure must be designed to meet support needs as the company expands its markets. The company offers 24 hour customer service via telephone and email (expedia.com, 2009). In order to provide this service, the business must ensure that it can manage the labor payment obligations for extra support staff and that they are properly trained in value-provision above and beyond simple service delivery. For example, a telephone representative who offers complimentary rental services to a frequent customer would be one example of delivering unexpected business outcomes to the customer, therefore providing value which is far beyond simple support services. Training and development programs to give representatives this knowledge in value delivery would be one strategic change which would be required at the internal level. Expedia.com may have particular concerns about promoting ethical value to consumers, over and above the act of service delivery. In this scenario, integrity would be a focus for internal organizational staff and for marketing promotion to show that the company is not only knowledgeable in bookings for travel, but can deliver on consistent ethics when dealing with multiple consumer demographics. "People of integrity will be willing to admit they were wrong and take corrective action" (Sawers, 2007, p.42). Expedia provides extra value, while also building a positive brand image, by using press releases to show how the company is taking steps to ensure ethical compliance within the organization. Issues of integrity, as extra value provision for the customer, can also be witnessed by Expedia.com's credit card guarantee which ensures that customer information will be handled in a responsible way while being transmitted across the Internet (Expedia.com, 2009). Even though Expedia is providing travel service and support, these extra guarantees that representatives with treat customers fairly and that their payment information will be secure provide this sense of value to buyers. At the strategic level, to provide even better online support and security, investment into more information technology systems and support would be required. Expedia.com, as the focal organization within the customer value funnel, provides value by creating promotional messages which are custom-tailored for international customers. Says one company representative, "In order for us to continue to deliver the high levels of service and growth that Expedia is known for, it was essential that our email marketing was highly personalized and targeted" (e-dialog.com, 2009, p.1). Expedia does not only book passengers from the United States, the company services European countries and Latin American countries as well, among other regions. The company seems to realize that in order to create a connection with international consumers, it is necessary to understand their unique cultural needs. "All customers do not define value the same way. Customers have different meanings for quality" (Rust, Zeithaml and Lemon, 2009, p.91). Expedia takes the time to conduct qualitative and quantitative research studies into what drives foreign customer values and lifestyles and then creates customized marketing materials to fit these values. Taking the time to create unique and targeted advertisements and other promotions is another element of value provided to customers showing their corporate social responsibility and their dedication to meeting widely-different needs in the travel industry. In order to provide this extra value, at the strategic level, Expedia.com must devote a considerable amount of its marketing talent to coming up with relevant and unique marketing materials for international buyers of multiple demographics. "Customers want solutions to their problems, not just products, and hate companies who waste their time" (Kirkby, 2008, p.5). Sending out direct mail information or email promotions which are not interesting to the buyer or does not fit their needs for travel will give them the impression that their time is being wasted and they will likely search out new travel company options. Expedia must have a stakeholder-focused philosophy in areas of promotion and ensure that the business can support multiple promotional strategies and that these strategies can be controlled and monitored for success. Essentially, auditing at the strategic level is one method of ensuring that customers receive value in promotion which builds brand reputation for Expedia.com. Expedia.com also creates value for the customer with its many business-to-business partnerships in marketing. Expedia offers discounted travel tickets as part of contracted agreements with various hotels and airline companies. When the airline or hotel has open seats and rooms which they cannot fill, they allow Expedia to offer these at a discounted rate, therefore obscuring from customers that these seats and rooms are left empty (Diller, 2008). Why' This would create a negative connection with the brand of hotel or airline partnering with Expedia if consumers perceived that issues of service or quality were causing one hotel or airline to experience drops in sales success. Expedia and its many partners in marketing perform a mutual brand reputation damage control so that customers still link value with their travel experience and do not run the risk of developing negative views of partner business health or financial strength. Many people who travel are investors themselves, therefore this type of damage control ensures positive perceptions of value in travelers at the marketing level. IV. Customer Perceptions of Value The University of Phoenix was recently acknowledged for its value-focused business model. Though the online educational company did not create new courses or subjects, it provides customers with new educational flexibility (Stefan, Brown and Gallan, 2007). Expedia.com provides this same flexibility in travel by acting as a medium for consumers to find the best travel deal or travel booking which best fits their lifestyle or schedule needs. "Customers seek support and service as primary activities which lead to positive perceptions of value" (Kirkby, 2008, p.6). Expedia recognizes these consumer trends and offers special email notifications when last minute flights or hotel deals become available, thereby giving the traveling consumer extra value in terms of cost reduction or cost savings. The flexibility is provided, much like the University of Phoenix, by letting the customer explore multiple travel alternatives, in a single forum, to find the best prices available. This can be conducted at home, at any time of the day, always with a dedicated 24-hour support staff available. Convenience and strong support provide most of Expedia.com's customer value. In areas of service and support and convenience, consumer perceptions of value are positive. Some of the customers' more traditional travel agent options involved face-to-face discussions with scheduled appointments that needed to be coordinated with the travel agency. The method by which Expedia.com links its internal human capital to long-term strategic goals of meeting customers' expectations for value have given them a positive reputation in the travel market. This can also be justified by the sales increases experienced by Expedia since its inception. One international clothing and homewares retailer, Marks & Spencer from the United Kingdom, was recently criticized for "alienating its customer base" by failing to identify its brand values (Marketing Week, 2009, p.6). Marks & Spencer had been chasing so many different demographics that it no longer had a core product or focus and has essentially become a mish-mash of distorted brand messages which were being sent through uncoordinated promotions. A sudden drop of profit of 37.5 percent shows that consumers have lost their positive perception of value with this retailer for failing to meet their social needs for brand values identification. Expedia.com, unlike Marks & Spencer, does have a core value philosophy and consistently delivers on any promises made within any value-oriented statements or business strategies. Expedia knows its customer base, looks for ways to strengthen relationships with its core, target customers, and therefore provides positive perceptions of value to clients. Companies like Marks & Spencer try too hard to identify with far too many demographics and loses touch with those who were once loyal to the brand. An international beauty company, The Body Shop, provides fragrances and natural beauty products which cater largely to the female target group. This company believes, as part of extended value focus, "that true beauty comes from confidence, vitality and inner well-being. We strive to use imagery which does not play on women's insecurities" (thebodyshop.com, 2009, p.1). The Body Shop therefore provides extra value to consumers by raising their impression that the company considers all women to be beautiful and is willing to help them maximize this beauty not just with products, but by offering assistance in self-esteem and developing a positive self-image. Additionally, this company builds a strong corporate social responsibility image by procuring organic beauty ingredients to use in their products, therefore catering to the new consumer demand for the environment and natural skin care. Expedia.com follows this same type of model and provides positive consumer perceptions of value by the method in which the company responds to customers. Expedia uses television advertising which shows the real-life struggles and hassles which can be associated with the travel industry and uses humor or imagination to show how Expedia can successfully handle or minimize these problems. The extended value is provided by linking lifestyle with the service, therefore creating an interpersonal connection between the brand and the end buyer. There are some attributes that customers demand that the company is not paying special attention to. First, "a green wave is sweeping the world" in relation to environmental protectionism and reducing a company's carbon footprint (Winston, 2008, p.15). Consumers are concerned about the corporate role in helping the environment and Expedia.com does not take advantage of promotions which show their efforts at contributing to a more positive environment. Major retailers across the world are investing millions or even billions of dollars into different environmental campaigns as an effort to appeal to this growing social trend. They believe these efforts, and the associated promotions, will bring more interested consumers into their stores because of environmental value-added activities. Expedia.com should be using the same type of philosophy and using its press release format to appeal to the green consumer. The traveler is witness to all varieties of different socio-economic environments, both pleasing and less-pleasing, therefore any contributions given back to local infrastructure improvement programs or otherwise associated with the environment should be publicized to add more value. This would require an adjustment of internal organization toward a new marketing campaign and would also require senior-level endorsement of eco-friendly objectives promotions. Otherwise, it would seem that Expedia.com provides extended value to consumers by adjusting its internal human capital (knowledge and expertise) and aligning it in a way that gives consumers new flexibility, convenience, and in some areas control over the travel booking and research process. By understanding its customers, Expedia.com is able to deliver consistent service and send the message of ethics, business know-how, and internal expertise to deliver a great service at an affordable price which is relevant to consumer needs. It would seem that the overall customer view of Expedia.com as a value-focused organization is quite positive which contributes to its high sales success each year. References Diller, Barry. (2008). "Expedia Annual Report 2008". Retrieved November 17, 2009 from http://phx.corporate-ir.net/External.File'item=UGFyZW50SUQ9MzM1MDk0fENoa WxkSUQ9MzE4NDU3fFR5cGU9MQ==&t=1 e-dialog.com. (2009). "Expedia expands global e-mail marketing with e-dialog". Retrieved November 19, 2009 from http://www.e-dialog.com/np_expedia_2009.html. Expedia.com. (2009). "About Expedia.com". Retrieved November 16, 2009 from http://www.expedia.com/daily/service/about.asp'rfrr=-1087 Expedia.com. (2009). "Credit card guarantee". Retrieved November 16, 2009 from http://www.expedia.com/daily/service/cc.asp'rfrr=-481 Kirkby, Jennifer. (2008). "What is it that customers value most'". Mutual Marketing. Retrieved November 19, 2009 from http://www.srd-grp.com/data/pdfs/mm-customers-benchmark.pdf Marketing Week. (2009). "M&S should return to core values after profits tumble". London, 21 May, p.6. Retrieved November 18, 2009 from www.proquest.com. Rust, R., Zeithaml, V. and Lemon, K. (2009). "Driving Customer Equity: How customer lifetime value is reshaping corporate strategy". The Free Press, p.91. Retrieved November 18, 2009 from http://www.scribd.com/doc/15003661/Driving-Customer-Equity-How-Customer-Lifetime-Value-Is-Reshaping-Corporate-Strategy Sawers, Andrew. (2007). "The importance of being honest". Financial Director, London, p.42. Stefan, M. , Brown, S. and Gallan, A. (2007). "Service-Logic Innovations: How to innovate customers, not products". University of California Berkeley. Retrieved November 17, 2009 from http://www.slideshare.net/fred.zimny/innovation-efforts-focusin-on-customers Thebodyshop.com. (2009). "How do we make our customers and employees feel good about themselves'". Retrieved November 18, 2009 from http://www.thebodyshop.com/_en/_ww/values-campaigns/self-esteem.aspx Winston, Andrew. (2008). "The Green Wave". Retail Merchandiser, Beverly. 48(5), p.15. Read More