Marketing Management - Value Proposition - Assignment Example

Introduction The competitive business environment requires that, any company has to undertake all the possible strategies and policies in striving to maintain or achieve a competitive edge in the market. Competition involves offering value to customers which would be equivalent to the cost and in many times beyond the cost that the customers have committed for the service. Perceived value proposition therefore would be described as the perceived value and satisfaction that the customers attach to a specific service, above and in addition to the services and goods that the customers have paid for. The value proposition in other words would be described as the customer service offered to the prospective customers by a particular company. Perceived value proposition therefore amounts to an extra cost on the part of the company, with an aim of offering added services to the customers, which creates a high standard perception to customers concerning the company’s products and services, in striving to maintain a competitive edge as described above. Perceived value proposition according to Steinhardt (2010, p57) might be explained as the sum of the relative value proposition and the resultant value proposition. Using the Blackblot Value – Marketing model, the resultant value proposition might be defined as the implicit promise that a specific product has to deliver fixed ratio of cost, status and gains in a specific time to customers, as explained by Steinhardt (2010, p57). Steinhardt further explained that relative value proposition could be explained as the implicit promise that a product has to customers to offer the desired combination of benefits and costs to the customer. For example, many customers have perceived the products from European countries such as Switzerland or France to be more superior and with much more features compared to the products from Asian countries, which are perceived to have fewer features and of less value proposition. This condition is however changing in the current market dynamics as the Asian countries develop. This amounts to perceived value proposition that customers attribute to different products and services. Company Description Singapore Airlines (SA) is a leading airline company that has extemporary services to customers that offer a competitive edge in the market today. Hax (2010, p50) explained that SA customers have always perceived the airline services not as a commodity that they have paid for as could be the case with many other airline companies, but the customers experience services that could be considered as a life time experience. The thrilling experience starts at the point where the customer extends their bags for checking, through the entire travel up to the time that the customer leaves the plane at their destinations. This means that, the services offered by the company to the customers, might be considered as extemporary compared to other airlines globally today. The services that SA offers are over and above the services catered for by the customers , and become a value proposition in the airline industry, since the services have been unmatched by many other airlines globally as Hax (2010, p50) explained. SA Company as Steinhardt (2010:58) explained, creates superior offers net positive benefits to the customers compared to other competitors, and has many perceived benefits such as a variety of reading materials that enable customers to catch up with the current affairs, as well as highly relaxation suites that enable the customers ample comfort ability. This makes the company to portray better understanding of their needs and priorities, which is one of the best strategies in marketing as Piercey (2002, p11) explained. In other words instead of doing surveys and questionnaires to understand the priorities of the customers, the SA company portrays their understanding of their prospective customers and their priorities through high quality services that are perceived as leading and above other similar companies. This amount to maintaining a leading edge in the market, since customers would to a large extent be attracted by such services. The perceived luxurious facilities and services that the customers enjoy in the tiers 1-3, have been able to attract many prospective customers through the perceived value that the high class services have compared to the cost of the same services. In addition to the information services benefits to customers, the SA Company offers high perceived value and benefit to the sport loving customers through provision of replays for important games where customers can always retrieve a favorite game to reply as they wait to board the plane. Those interested in computerized games are offered the latest computer games on which they might exercise their senses with their favorite games. The perceived benefits of the above services to sport loving customers enable the customers to involve their hobbies in the process of their flights at a relatively cheaper process as perceived by the customer. This is in line with the market-driven company strategy, as explained by Steinhardt (2010, p59). Hax (2010, p50) explained that, SA Company was the first airline globally to offer the luxury services of free flow of champagne to the economy class customers. Provision of such high standards to the economy class could be considered as the greatest value creation to a customer, irrespective of the price paid for, by the specific customer. It portrayed a great deal of concern and recognition that the company has for all its customers, an important strategy that moved the company to the edge in the competitive world of airline services through capturing the imaginations of the customer in quality additional services.. As Piercy (2002, p12) explained, the recognition of each and every customer, and the value that the specific customer has to the company, amounts to be the leading strategy in marketing where a company persuades the customers to use its services through perceived value proposition The competitive aspects The competitive advantage for SA airlines therefore comes from the perceived value of the differentiated services provided. The airline provides unmatched facilities and services that involve the hospitality and food industry in the air or on the ground. The services according to Hax (2010, p51) have been described as the most favorable compared to other airlines globally, with much attention given to all the details as well as the recognition and standardization of the 4 classes of travel. The world class facilities enable the customer to view the company as a value adding service provider with a much higher cost- benefit ratio as compared to other competitors in the market today. The company has been described as a source of infinite ideas in service provision to its customers. The customers at the end of each flight have a thrilling edge in the fact that the next flight would be better and much exciting than the previous one. The cost of the services has therefore been hidden by the advanced value creation services that enable the customer to perceive the extra cost as being worth the benefits achieved in the company services Major competitors Qatar airways Qatar airways is another leading airline service globally that has been described as a world class flight experience by many customers due to the extemporary services that the company offers to the customers. One of the value proposition involved in this company as is with the case of SA airlines is the recognition and improvement of services offered to economy class customers. According to the Qatar Airways Corporate Communication (QACC, 2009), the company has introduced a thrilling experience in economy class aimed at serving meals to economy class customers with recyclable materials. This according to the company has been intended to improve the experience of the customers while flying. Barnes and Blake (2009:202) explained the need of new ideas and innovations in creating value to customers which would aid in building a value proposition perception to all customers. The innovation of using the above explained facilities would be aimed at ensuring maximum satisfaction to customers. This has been the ideology behind the various facilities provided by the SA Company to their esteemed customers to increase the sales force and target out of value proposition perception as Barnes and Blake (2009, p202) explained. Ahmed and Rafiq (2002, p10) further explained the need for customer satisfaction both physically and psychologically in improving the performance of any company. This would amount to perceived value proposition where the customers would gauge the cost of the service with the attributed benefits before making a final choice. The SA Company as well portrayed innovativeness in creating value by introducing computer games and game replays as a value adding strategy to satisfy the prospective customers. . All flights to and from U.K for QA, use the recyclable materials to serve meals to the economy class customers, with the ideology that, the mode of food presentation influences the way it is enjoyed as well as the tastes of the foods. The new way of presenting foods to customers has been proved by the company to offer a well culinary journey. The value addition involved with the Qatar Airways Company is the sensitivity and concern that the company has on environment. As QACC (2009) explained environmental concern has been the biggest value proposition not only to the company’s customers but globally as well. The disposable materials used which have been described as 99% recyclable, and have a value proposition in which customers enjoy eco friendly facilities that are not experienced in other airlines globally. The perceived value that the company creates to customers by reducing environmental pollution would be in line with value creating strategies that companies use in uncovering the existence of a problem and proceed to tackle the problem in the best way that has value for both the customer and the company as Steinhardt (2010, p58) explained. This might be considered as the deviation between the perceived value proposition by SA Company and QA Company. While the former extends the value proposition ideology to environmental issues, the latter concentrates on the services offered to customers directly but with less concern for the overall environmental factors. According to Ahmed and Rafiq (2002, p8), the environmental concern would amount to integration and coordination of inter-functional strategies in creating a value perception to customers. Passengers in both the companies are offered extremely high perceived value in terms of the meals provided for all the customers irrespective of the class of flight. While the QA allows choosing among three meals including those considering the health factor in balancing of meals, the SA Company provides free flow of champagne and food to the third class passengers contrary to other companies. As Capon (2009, p20) explained, customer- focused strategy has been noted to deliver extremely high results to companies, and the two companies use the same strategy to create the cost – benefit value to customers. The perceived value of providing the above benefits, as an addition to the services that the customer has paid for therefore amounts to an excellent value creation strategy. The ability of customers to choose their meals in the flight as is the case with QA Company might be compared to the ability of customers to choose their best entertainment forums as a customer value creating strategy as is in the case with SA Company. The ability to chose from game replays, computerized games and others, in SA company would also come as a customer focused strategy as explained by Capon (2009, p20), since all the services have been design with an aim to offer maximum satisfaction to the prospective customer, while at he same time creating a superior perceived value to the company, as judged by the customers. Both companies have been rated as 5 star companies with respect to the perceived quality services that are extended to customers. In addition as Barnes, Blake and Pinder (2009, p203) explained, the companies have assumed a customer based approach to all their operations, where the corporations are reengineered from the vertically oriented organizations, to more flexible and dynamic environment where the customer has been recognized as the center of all the operations in the company. This might explain the presence of luxurious facilities such as the state of the art lounges that allow maximum relaxation, and an e gate that saves both time and energy while checking in. the services in both the companies have been designed to have a very high cost- benefit ratio, which according to Steinhardt (2010, p56) influences the decision made by the customer in that, customers would in all times try to figure out the relevancy, type and magnitude of the perceived value proposition that a specific product holds to them. This acts as the main guide that empowers the customer to make decision after comparing several similar services. A customer centered approach as applied in both the SA and QA Company has therefore increased the perceived value proposition of using the two services to their ranking as 5 star flight service provision companies. Generally, the travel experience with Qatar, Airways has been described as a 5 star travel experience in the nature of services provided during the flight. The services are however a bit below the value proposition offered by SA Company which covers the entire travel process and not concentrated on aspects such as food as is in the case of Qatar Airways. Slywotzky (1996, p45) explained that addition of features as well as manipulating the process of the services in a way that captures the customer’s imaginations might be considered as the key to success in many companies. The difference between the SA and QA companies might be well described using the explanation above. The superiority in SA Company comes in the innovativeness in which the company attracts the imagination of the customers in question. Hax (2002, p51) explained the various facilities and services that the company extends to all its customers in the executive as well as the non executive classes. Unlike the QA Company, the innovativeness and customer focused services that the company offers to the prospective customers have been spread overboard and not limited to certain classes or departments. In fact, as explained before, the SA Company was credited as being the first flight company to allow free flow of foods and champagne to economy class customers. This portrays the superiority of perceived value proposition to the growth of the company and customer base. The company has therefore achieved capturing the customer’s imagination to a large extent through manipulating the cost- benefit ratio, to ensure that the customer achieves optimum satisfaction at the best cost possible as explained by Slywotzky (1996, p46). Suggested value proposition Value addition and good customer services according to the above cases have been indentified as the best way to attract and retain customers inform of perceived value proposition. Many companies will go a great extent in inventiveness to come up with superb services that would be aimed at attracting potential customers to their business, an undertaking that has worked perfectly in many companies such as the SA company discussed above. Piercy (2002, p24) explained that 82% of customers would retain their loyalty to a specific company due to the value that the company offers to the customer. This is in comparison with 69% percent, who would most likely consider the pricing criteria for the services. It therefore means that many customers would be willing to pay an extra coin to a company that has the highest value proposition criteria, which they would like to take advantage of. It therefore calls for the introduction of another better and more important value proposition to offer the customers a better service. The ability of the customers to rate, give credit to the staff and propose the staff members that they would most likely like to be served by in the next flight, would be the best value proposition that would be extended to the customers, to enable them enjoy the best services as well as adding more value to the company. As Tynan, Mckechnie and Chuon (2010, abstract) explained, customers would in all the luxurious brands perceive sufficient value to compensate the expensive services that are rendered to them by companies. It therefore follows that, improving the perceived value proposition involving quality services in SA Company would still attract potential and retained customers despite the cost that they have to pay for the services. Moreover, Tynan, Mckechnie and Chuon (2010, abstract) explained that, to increase the perceived value of the product, companies have to shift from the product centric strategies, to strategies that stress and focus on personalized brand experiences. To improve the perceived value proposition in SA Company, the company would therefore be required to focus on personalized services where executives would be granted the privilege to determine the quality and type of service that they would require. Piercy (2002, p25) explained the importance of allowing customers to give feedback regarding the type of services that they receive from the staff members. The customers by being given the privilege of rating the staff members on a scale according to their services would help in creating more satisfaction and improving the services that would be otherwise offered to them. The perceived value proposition improvement in this case would in most case apply to the executive class where specialized services and details in the service would be of utmost importance. This is because, the above class would be equivalent to the face of the company and every concern would be dedicated to ensure that the face value has been offered in a 5 star type of service. Hax (2010, p56) identified one of the best practices in value proposition as offering unique customized services and delivery systems that would leave the customer dreaming of more services from the company. This would be in line with the proposed value proposition whereby, the executive class customers would be encouraged to rate the personalized services offered to them as well as the corresponding staff offering the services. This services when introduced from class 1-3 would be much more appropriate in designing the staff base as well as the qualities of the services that the staff would be expected to lend to the prospective customers. The confidential staff rating value added proposition would be evaluated after every flight to specific destinations, where the customer would be required to place the rating templates in a specific area that only the senior management staff would have access to. The other staff members would not be allowed to have access to the templates to ensure that the ratings have not been tampered with. One of the requirements of the rating service would be for the executive customers to propose whether they would prefer to be served by the same staff members in their personalized services in the following or next flight. Giving the customers the ability to choose the staff members to serve them would be aimed at making the personalized services more customer-driven rather than specifically designed by the company as explained by Piercey (2002, p24). The latter static and rigid service delivery services offered by many airline companies, amounts to traditional business strategizing, which has been passed by the events due to the high innovations and competition that many competitors exercise in the market. The rating service would however be required to cost the company an extra budget since only the highly specialized personnel would be required in the personalized services sections. This might make it much difficult to implement the service in the economy class. However, it does not mean that the class would be discriminated upon, but other value added services as described in the above cases would be required to be implemented as required, to make the whole flight process a lifetime experience to all the customers. Implementation Plan Payne and Holt (2001, p160) explained the need to implement the value proposition by companies in a manner that would allow the customers to view the perceived value of the services clearly, but not hidden by the pricing of the specific service. Before implementing the above value proposition improvement, the customers must be a position to figure out the quality services irrespective of the billing or the price that they would be required to cater for. To implement the above plan, the honesty of the customers would be of utmost importance and would be required to be emphasized forehand. The company would also be requested to ensure that only highly qualified and dedicated personnel are included in offering the classes 1-3 customers the required specialized services. The company would print templates with several characteristics that they would be aiming to determine in customer service provision and a scale factor that would be used in the rating. These qualities might include but not limited to honesty, dedication, rudeness, response to complaints, service mistakes and billing errors, loyalty and others. The rating might include such scales like; very bad, bad, average, good, very good and excellent. The templates would have a provision for writing the name of the staff member, who would be required to introduce themselves to the customer upon the start of the flight process. The templates will also included the types of services to be offered to the customers as pert their classes of flight, indicated to correspond to the ranking scale. The 4Ps marketing mix which focuses on the importance of the product, price, promotion and place would be of utmost importance while implementing the perceived value proposition. Payne and Frow (2005, p170) explained that for a company to implement the customer relationship management strategy (CRM), all the ingredients of the 4Ps marketing strategy have to be designed in a customer centered approach. This would enable the company to create more perceived value to the customers as a result of the reliability and service quality attributed to the implementation of the 4Ps strategy. To implement the improvement of the value proposition externally, Doyle (2008) explained that, the strategy should focus on the competitive advantage of the company as well as the perceived value attributed to the company’s products. Since the SA Company being a 5 star in airline services provision is a proof of having a competitive edge in the market, the implementation would therefore be easier as the product and promotional factors in the 4ps matrix have been well catered for, in improving the brand name of the company. Fifield (2007, p27) explained that, for a marketing strategy to succeed, all the stakeholders in the company have to be involved in the implementation of the specific strategy. The implementation of the perceived value improvement would to a large extent require the participation of the employees in offering the quality services that would amount to a superior company brand name as explained by Doyle (2008). Customers would be in direct link with the staff and the latter have a role in ensuring the success of value proposition improvement in a company as a result of their superior quality services that would increase the cost benefit ratio to customers. As Piercy (2002, p26) explained, it matters to a large extent what the customers think, for satisfied customers would make loyal customers, and loyal customers would lead to repeat business and this would translate to tapping of their expenditure as well as recommending the airline to other customers who would also become loyal customers. The customer feedbacks would therefore be required to be taken into considerations with the highest degree of discretion aimed at balancing both services as well as the possible limits that the company might extend to offer such services. The process would therefore be a cyclic process, where the customers would make recommendations; the management would implement the feasible recommendations as well as the required follow up to ensure that the recommendations have been implemented by the staff members. This value proposition would offer the company a leading competitive edge in the market while at the same time satisfying the customers to the best extent possible. Value proposition would therefore amount to another marketing strategy, through which the company may tap other prospective customers, in its expansion programs. Word count 3993 References Ahmed, K. P. and Rafiq, M. (2002) Internal Marketing tools and concepts for customer-focused management Oxford: Butterworth Heinemann Elsevier Barnes, C., Blake, H., and Pinder, D., (2009) Creating & Delivering your Value Proposition London: Kogan Page, Capon, N., Capon, R., and Mac Hulbert, J., (2009) Managing marketing in the 21st Century – European Edition New York: Wessex Inc. Currie, W., 2010. Value creation from e-business models. MA: Springer Science and Business Media LLC. Doyle, P., (2008) Value-based marketing 2nd ed. Chichester: John Wiley and Sons, Ltd Fifield. 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