Value: Modern Importance but Not a Sole Priority - Literature review Example

Value: Modern Importance but not a Sole Priority Contents List of Figures 2 Introduction 3 Value 4 Consumer Behaviour 5 Acquiring Value 7 Consumer Behaviour Domains 8 Conclusion 10 References 11 List of Figures Figure 1 A Framework of Cross Cultural Consumer Behaviour (Mooji 2005, p. 95) 5 Figure 2 Approaches to Acquiring Customer Value (Raab 2008, p. 95) 7 Value: Modern Importance but not a Sole Priority Introduction Organizational emphases on aspects of business have changed as the development of consumer trends have changed the way in which products are presented. Three key concepts, service quality, satisfaction, and customer loyalty are no longer the centre of creating a relationship with consumers. The latest trend in emphasis in relationship to the consumer is value (Foss 2011). Creating value for the consumer, or at the very least the appearance of value, has emerged as the economic crisis has created a dynamic in which economic restraint is in fashion. Therefore, expenditures are assessed for the value in contrast to the cost that is experienced by the consumer. While value may be at the forefront of the corporate goals in relationship to consumer expectations, service quality, satisfaction and customer loyalty comes through the value that is attached to a product or service. While these concepts may seem to have become set aside in favour of value, value is defined by these aspects so that the consumer feels they are getting the best possible service and product for their money. One cannot truly create value if quality and satisfaction are not met, and without quality and satisfaction, loyalty will not be the result. In trying to determine value, it is important to set criteria through which the company can operate and the consumer can perceive the value of their purchase. As an example, if a company can build computers for a lower rate, but still maintain high quality that have added an aspect of value for the consumer. If they cannot maintain service for those computers, however, there is a loss of an aspect of value. Value is a construction of a number of aspects of a product and must be weighed in relationship to consumer expectations. Once value has been assessed in relationship to what is offered by the company, customer value becomes a hinge upon which continued success can be relatively assured. Customer value comes when people become customers through repetitive buying behaviours, though adapting to the culture of the product line, and through becoming a resource that is then tapped in order to create further success. Understanding how customer value is achieved requires understanding consumer behaviour. Thus an understanding of the relationship between the organisation and the consumer can be achieved (Samover, Porter, and McDaniel 2011). The necessity to understand how value to the consumer and customer value is achieved must be attained through an understanding of relationships as they are defined through service quality, satisfaction and customer loyalty provides for the comprehensive understanding of customer value and in achieving value for the customer. Without the foundational concepts, the idea of value becomes a meaningless term with no basic understanding. It is essential that service quality, satisfaction and customer loyalty be involved in the construction of the overall dynamic of the relationship that exists between the organisation and the consumer. Through these concepts, value is constructed Value The idea of value is based upon the exchange of use for benefit. From the perspective of the consumer, a product provides value through the benefits that are achieved in its use in comparison to the money that was spent to achieve the purpose that was intended. Value to a consumer, in this economic stage of history, is defined on a great number of levels, some of which are at the basic level, others residing at the level of self-actualisation. If Maslow’s Theory of Needs is applied to the concept of value, the basic needs such as food, shelter, and safety are purchased by the consumer by working towards getting the best of the examples of those needs in balance with the costs they will incur. Further examining Maslow’s theory allows for the top level, self-actualisation to be examined in relationship to how the purchase of an item allows for the consumer to achieve some sense of self through ownership. In the consumerist society that has emerged in the last hundred years, ownership has become a complex and multi-faceted aspect of identity in which what one owns, who the maker is of the item, and what purpose it fulfils in the post-industrial society is relevant to the question of the identity one holds within that society. Owning an item from certain designers means that one is identified for the attributes that that designer represents. Certain cars, certain neighbourhoods, and levels of technology all work to create identities within the social environment. Value becomes not only about how an item fulfils its utility, but in how it represents aspects of the individual’s beliefs and values within the culture. Value from the consumer perspective is about how an item fulfils its purpose in comparison to the costs that have been paid for it. As well, it can be related to how the product falls within the ethics of the consumer, creating a belief that it fulfils social responsibility as well as personal need (Carroll 2009). At times, value is in how high the cost, at others it is in how low the cost. Value has many meanings and can be attributed up and down the pyramid of needs, creating a complex system through which the consumer makes choices. The necessity for evaluating consumer value to an organization requires that the aspects of the consumer relationship be structured to facility sustainability through determining how value is ascribed to the use of a product and how that ascribed value can be perpetuated through future transactions. Consumer Behaviour Mooji (2004) discusses that consumer behaviour can be defined as an interaction of affect and cognition within an environment through which people will conduct exchange. Consumer behaviour will shift in relationship to what emerges as important within the cultural context of consumer activities. Cultural factors that influence consumer behaviour are defined by the values that are involved, rather than in the environment that has been built around consumer activities. As shown in Figure 1, Consumer behaviour can be outlined by attributes, income and processes that contribute to the consumer behaviour domains. Figure 1 A Framework of Cross Cultural Consumer Behaviour (Mooji 2005, p. 95) To understand what is important and has value to a consumer it is necessary to understand the how culture is relevant to the value that the customer will place upon their relationship with the company. One of the first demographic areas through which a relationship is built is through income. If the income is not at a consistently high enough level to attract a client over a continuation of purchasing habits, the customer does not have a sustaining capacity for the company. Income, while not always a determination for the consumer as to whether or not they will make a purchase, is a determination on the sustainability of their relationship with the organisation (Haugtvedt, Herr, and Kardes 2008).. What can counterbalance the income are the social aspects of the purchasing habits. Through an examination of the social motivations for making a purchase, the importance of ownership becomes part of a sliding scale of value (Donovan and Henley 2003). Apple products can be used as an example to understand the overall nature of how a brand culture is defined by the customer value that is established in order to create sustainability. The Apple iPhone, as an example, can be used to explore how a variety of demographics become consumers of the product but that might not have been a consumer product if not for the power of the brand itself. The iPhone finds its way into the hands of young and old, rich and poor, as the value of the product through its trending capacities and the social status of the instrument applies an exception to the expenditure that might usually be justified by all social classes (Aswathappa 2011). The motivation can be trend as much as utility. Another example of this can be seen how the globally relevant athletic wear company Nike approaches their consumers. Phil Knight, one of the founders of Nike, has said “Nike’s mission is not to sell shoes, but to enhance peoples lives through sports and fitness” (Slaughter 2004) An examination of Figure 1 shows that culture is an important aspect of understanding a consumer. Who the consumer is in relationship to their personality which is defined by their self concept which is how they frame their identity, their general image and identity, attitude and their lifestyle, will determine how the product of an organisation will fit into the overall sense of identity (Holt 2003). Becoming a part of the product culture is highly determined by the type of personality attributes of the individual. Looking at income, processes related to cognition and socialisation, and attributes of the individual personalities comes together to form the consumer who is influenced by a series of sets of values and cultural pressures in order to come to conclusions and decisions in relationship with purchasing power. This produces responses within the consumer behaviour domain in which owning a product assigns certain values, which in turn affect adaptations to innovations, how the consumer becomes loyal to a brand, and how media influences have the capacity to increase organisation success through customer value (Orter 2006). The theory that was put forth by Geert Hofstede provides some understanding of how culture influences value and how behaviour then relates to that value (Hofstede 2001). The Hofstede Model can be used to help to calculate how consumers are related to organisations so that global competitive issues can be assessed (Peng 2008). Through developing an overview of global efficiencies that relate to scale and scope, a firm can develop a strategy in which to engage the most profitable customers (Piepenburg 2011). Understanding customer value is an assessment of understanding how to connect to the values that are important to the customer to create value that is sustaining for the business. Acquiring Customer Value Rabb (2008) discusses the nature of success through the acquisition of customer value. Customer value is based within the power of a company to know how the customer typically behaves, can influence that behaviour, and invests in customers who have been proven as value. Competing on all levels for all customers makes no sense, but in determining how the customer is valuable to the company, success is more than likely to follow. Focusing on those customers for whom the company is in service and how they will respond to the company will ensure continuation of consumer attention. Figure 2 shows a representation of how the flow of customer value can be recognized in relationship to organisational success. Figure 2 Approaches to Acquiring Customer Value (Raab 2008, p. 95) As can be seen in Figure 2, the personal aspects of value begin through the orientation of the customer to the product and proceeds towards the quality that the product provides for the consumer. The quality will then lead towards satisfaction which will increase the possibility of retention of that consumer. At that point, the retention applies value to the consumer as he or she is now a part of the culture of the product, the value of that application becomes a part of the structure of company success. Once again, the Apple company can be used as an example as they built relationships around the iPhone, then introduced the iPad to extend that value and to perpetuate the relationship of the concepts that were originated in the iPhone. Because of the strong presence in the market of the iPhone, value was transferred onto the iPad perpetuating the strength of the relationship. Strengthening the relationship between the consumer and the brand is a part of creating sustainability within the market (Anholt 2003). There are a variety of approaches that can be used in order to assess customer value. A transition from a transaction based approach to a relationship approach opens up a variety of ways in which that relationship can be defined (Cox 2011). One approach is profit contribution per consumer, the buying habits translating into a level of profit per consumer in relationship to loyalty and retention. This can be developed through CRM or Customer Relationship Management in which the organisation identifies which consumers are important in creating long-term success (Saxena 2009). The basis of this understanding is that no one entity can be everything to everyone. Thus, it is important to focus on what works best to create value customers who sustain the success of the company. Consumer Behaviour Domains Mooij (2004) defines consumer domains as product ownership and usage, adoption and diffusion of innovations, complaining behaviours, brand loyalty, responses to advertising, and media usage. The consumer domain is defined as those aspects of consumerism which are in the control of the consumer. The consumer creates a place within a culture off a brand through their applications of their control. The use of these controls helps to form the bond with the product, assigning appropriate value to the product, and then creating customer value through future relationship activities. Returning once again to the Apple iPhone, choosing to own the product and then applying usage to the product creates an overall cultural connection to the brand for the consumer. Owning an Apple iPhone puts a relationship between the consumer and Apple, creating opportunities through innovation and the adoption of the practices associated with the product. The iPhone has gone through several generations, currently on its fourth recreation in which upgrading and using the new aspects of the product has been a part of the relationship that the consumer has made with Apple. Complaining about a brand is also a part of being associated with that brand (Stijn, Osselaer, and Alba 2003). The ability to complain has also been a part of the relationship that Apple has created with its consumers, many of the problems an ongoing litany within the Apple culture. Some of these complaints include easily dropped calls, a difficulty in connecting to the network, and the fragility of the object. A sub-culture has naturally evolved between those who have use of the iPhone, but who are critical of its function and utility and can complain and disavow their approval, all the while being a part of the culture. Those who are dissidents of the brand are also a part of the brand culture which is overwhelmed by those who feel they gain value from their participation in the culture. Both dissidents and approvers are provided with belonging, their need to be a part of something satisfied by owning or criticizing the brand. Dissidents provide value to the company as innovation solves the problems brought into the public sphere, sales increasing as improved products hit the market (Baldoni 2008). The culture becomes complex and can be seen as promoting the product and spreading as a subculture within a cultural environment. The balance, of course, must be with a larger number of those who have brand loyalty than those who are critical of the product. One of the positions that an organisation and the consumer mutually control is the use of media. The organisation uses media in order to create noise about their product, the consumer engaging in the discourse that is created or rejecting it. While psychological construction of advertising makes it appealing at a level that is difficult to resist when it is done well, the ultimate decision to give into the media influences or to plot a different course is that of the trends. One may purposely choose to follow the competition or to defy social conventions and follow a path that is less travelled. The use of the power of consumer choice provides for a series of options through which value is created (Lepla, and Parker 2002). If an individual chooses the competition, they become a member of the customers who create customer value for the competing organization. Their choice to defy what is popular for its competition places them within the sustainability of that organization. In choosing a less travelled path of purchasing choices, the niche of a smaller company finds sustainability through customer valuation. The appeal that draws those specific individuals towards smaller companies provides for a consumer profile that will create value for that type of company. Conclusion There are two sides to the concept of value in relationship to consumerism. The first aspect is the concept of value at it is recognized by the consumer, a product providing for the consumer a fulfilment through which they find satisfaction. On the other side of value is the value that the customer provides to the organisation, the relationship creating sustainability through patterns of consumption through which sustainability is created. In a globalized economy it is essential to find a way in which to define the position of the customers in relationship to how those customers can be exploited to sustain the existence of the organisation. The question that has been proposed for this paper has been whether companies should abandon service quality, satisfaction, and customer loyalty in favour of value as the focus for success. This strategy is ill-conceived as the consumer maintains expectations of quality and service in order to place loyalty in favour of an organisation. Value has been shown to be constructed of these aspects of the sales relationship, thus they must be maintained in order to create the value that will create success. In order to create value in modern contexts of creating sustainability within a market, service quality, satisfaction, and customer loyalty must be a part of the construction. In examining these aspects of value it is clear that the trend of focusing on value does not dismiss the need for considering service quality, satisfaction, and customer loyalty is still relevant to creating value for the customer and from the customer in relationship to sustainability. Without attention to various aspects of the relationship with the consumer, sustainability will not be the outcome, which will not support organisational success. It is essential that these types of considerations always be a part of developing relationships with customers. Without continuing to put importance on the various aspects that create the relationship between customers and organisations, value will not exist. References Anholt, S. (2003). Brand new justice: the upside of global branding. Oxford, Butterworth-Heinemann. Aswathappa, A. (2005). International business. New Delhi: Groven. Baldoni, J. (27 October 2008). Leadership case studies; A salesman’s leader. “Business Leadership Advice” [Online] Available at http://www.businessle adershipadvice.com/ Carroll, Archie B. (2009). Business & Society: Ethics & Stakeholder Management. Mason, OH: South-Western Cengage Learning. Cox, Emmett. (2011). Retail Analytics: The Secret Weapon. Hoboken, N.J: Wiley. Donovan, R. 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