Natures and Methods of Creating Customer Value - Literature review Example

Creating Customer Value Review Report Student’s Name Institutional Affiliation Table of Contents Table of Contents 2 Creating Customer Value Review Report 3 Introduction 3 Background on the Papers 4 Research Issue(S) and Identified Problems 5 Marketing Theory/Theories 6 Implication for Marketing Managers 9 Recommendations 11 Conclusion 12 References 14 Appendices 15 Appendix 1 15 Creating Customer Value Review Report Introduction Customer value has for long been an important topic in the field of marketing. Businesses all over the world are seeking new and innovative ways for creating customer value. In general, most businesses have a tendency to overlook, misunderstand, and underestimate their customer’s expectations. However, most successful firms have something in common, which is the customer value. Based on the broad scope of methods and issues in creating customer there are different types of methods for creating customer value. This following report is based on understanding the different natures and methods of creating customer value. Creating customer value is based on understanding the expectations, preferences, and needs of consumers to ensure that new products and services offer value for the consumer. Reviews in this report including Rajagopal (2006), Measuring Customer Value Gaps: An Empirical Study in the Mexican Retail Marke,t Blocker, et al. (2011) Proactive customer orientation and its role for creating customer value in global markets, Michałowska, et al. (2015), Forming relationships on the e-commerce market as a basis to build loyalty and create value for the customer: Empirical findings, Ming-Hsien, et al. (2014), Customer Value and Customer Roles on Social Media: A Travel Agency Case Study, and Schmitt, et al. (2011) Referral Programs and Customer Value, focus on researching how customer value is created in different business areas and the overall effect of the different methods of creating customer value. Background on the Papers As earlier mentioned, this report focuses on evaluating the different methods businesses create customer value. Additionally, the report also seeks to understand the effectiveness of different methods of creating customer value. The empirical study offered by Rajagopal (2006), focuses on researching the customer value gaps experienced in the process of marketing new products or services. In this case, this study is founded on the fact that current business practices illustrate gaps in the process of developing customer value while marketing new products or services. Therefore, most businesses do not fully or comprehensively consider all the effective step or processes when creating value for consumer. This is the main reason some companies or brands are unable to keep loyal and satisfied customers. As a result, this report seeks to identify the key issues or factors involved in the process of creating customer value for increased organizational benefits. By doing this, the report derives conclusion on the relevance of considering relevant factors while creating customer value for new products and services. Moreover, the report centers on evaluating the different methods or strategies used by firms to create customer value. Numerous methods and strategies are used to create value for customers. The basic method of achieving customer value is based on meeting the needs, expectations, and preferences of the consumer. Moreover, it also involves understanding the consumer well-enough to know what they expect or what they want to experience. Blocker, et al. (2011) study evaluates the effect of proactive customer orientation on creating customer value. Consequently, the study applies an innovative evaluation tool based on the value-satisfaction-loyalty chain to investigate the overall effectiveness of proactive customer orientation. This will help the current report in identifying the effective framework that can allow businesses to create customer value in an efficient manner. Another method used for creating value among customer is through referral programs. The report will also seek to understand the overall effectiveness of different methods of customer value creation. Schmitt, et al. (2011), evaluates the overall effectiveness of using referral programs in marketing as a means of creating customer value. Finally, the report also focuses on the use of technology in creating customer value. One of the main dimensions changing the face of marketing today is technology. Ming-Hsien, et al. (2014), study focuses on how social media plays a role in developing customer value and customer roles. This will enable the current study to conclude on how technology is impacting customer value and its application in creating customer value. Furthermore, Michałowska, et al. (2015), study has also researched on how customer value is created by developing relationships on the e-commerce market. In this regard, the report will be able to evaluate the techniques in online or technology-based platforms to create customer value. Research Issue(S) and Identified Problems Research on creating customer value has been very controversial. Understanding and defining what is customer value and how it can be created tends to presents numerous gaps in both empirical and theoretical research. Most of the research in creating customer value is based on numerous significant epistemological effects for marketing as a discipline (Rajagopal, 2006). Nonetheless, all the research on customer value includes elements of marketing in two major manners. This includes the economic dimension that focuses on the supposed price that is expected to create value for the customer (Michałowska, et al., 2015). Furthermore, the psychological dimension focuses on the affective and cognitive impacts on brand choice as well as product purchase (Blocker, et al., 2011). Therefore, research concerning customer value revolves around developing relationships rather than systematic reviews. Research on customer value is not adoptive, but a relationship issues where different elements are needed to identify the actual customer value. Based on the relationship issues, it means that the research also focuses on mixing different factors to identify the process of creating customer value (Schmitt, et al., 2011). Research focuses on analyzing different factors that relate to marketing and its impacts on the consumer experience. No single factor can help to determine the actual customer value, thus the need to focus on a wider concept since different tools and strategies can create customer value (Ming-Hsien, et al., 2014). Marketing Theory/Theories There are different marketing theories that relate to creating customer value. These marketing theories are either developed based on individual research or established from previous research and accepted theoretical frameworks. Marketing theories are relevant in making connections of scientific research and marketing practice. As indicated earlier, there is the economic and psychological dimensions of researching customer value. In economic terms, customer value can only be measured through the theory of utility. Developed by Tellis and Gaeth, 1990 the theory of utility argues that customers realize value based on the variance between ‘utility’ offered by the attributes or features of a product and the ‘disutility’ characterized by the price paid. In terms of evaluating customer value gaps, Rajagopal (2006), applies the utility theory where the price is not just a monetary value, but also a representation of the features and value a customer gains by paying a certain price for a product. Another marketing theory applied in creating customer value is Gutman’s 1982 means-end theory. This theory implies that a customer’s decision-making process regarding a consumption are influenced by links concerning product features, supposed impact of consumption, and customer’s personal values. Michałowska, et al. (2015) and Ming-Hsien, et al. (2014) utilize the means-ends theory where customer value is developed through the customer’s means of linking product attributes to their desired ends or expected value. Additionally, customer value is also understood through the value theory developed by Hatman (1967). The value theory or axiology is based on three value dimensions including emotional, practical, and logical dimensions. Emotional dimensions focuses on the psychological feeling of customers. The practical dimension focuses on the functional and physical factors of consumption while logical consersn the abstract characteristics and rational of purchase. Schmitt, et al. (2011) and Blocker, et al. (2011) utilize this theory in developing and investigating the best factors to consider in creating customer value. Major Findings The major findings of this report are based on the methods used to create customer value, the gaps in these methods, and the role of technology in creating customer value. Creating customer value is directly related to meeting the needs of consumers. Businesses should be able to anticipate, predict, and work on meeting the needs, preferences, and expectations of consumers. Blocker, et al. (2011) study focuses on the effectiveness of using proactive customer orientation as part of increasing customer value. By reviewing the interviews of managers who were customers of service providers, the study finds that customers desire extra input or effort from businesses in an attempt to proactively anticipate their changing needs. Additionally, by conceptualizing, gauging, and analyzing proactive customer orientation with consumer, the study also finds that customers appreciate firms that focus on hands-on engagement based on their changing needs realize increased value in their business relationships. Therefore, a major finding is that customer value can be created through proactive understanding of customer needs and expectations. Another major area of the report finding is based on the different gaps in creating customer value. If businesses fail to take certain steps or strategies, they may face losing customer value. Companies that focus on one side of marketing may miss the whole picture in terms of creating value. It is in this light that Rajagopal’s (2006), study found a correlation between product position and product delivery in terms of creating customer value. The study found that effective retailing management and product positioning help to decrease the gap on consumer perceptions on products. Another major finding is related to communication and the role it plays in creating customer value. Most of the strategies used in creating customer value involve increased communication. Schmitt, et al. (2011), study on referral programs and their role in creating customer value finds that use of referral programs offered a low-cost way of creating customer value. This type of customer value is based on ensuring the customer is satisfied while the business gains value through reduced costs for acquiring customer. Therefore, there is an economic dimension that is based on the cost effectiveness of acquiring new customers. Lastly, the report also notes the role of technology in creating customer value. In this case, technology has allowed for increased communication abilities that enable companies to engage their customer effectively. The changing marketplace has transformed in to increased online strategies. In this case, for firms to effectively create customer value, they require to create and meet customer expectations in the e-commerce sector. Schmitt, et al. (2011), interviewed customer who had experiences with online shopping. From the study, customer realized increased value from their experiences. In this case, issues such as communication, price, effectiveness of delivery, and overall variety of products were noted to offer increased customer value. Additionally, Ming-Hsien, et al. (2014), study on how social media can create value illustrated that consumers who use social media realize value from four different dimensions. These dimensions include what they can be able to do in the social media page of a company before they buy or access a service. This relates to a new element of creating customer value based on customer roles and behaviors in the process of creating customer value. These four dimensions include inquiry, clarification, opinion provision, and proposal. All these issues are strategic in ensuring that customers have opportunity and play their role in creating their own value. Therefore, the use of technology certainly plays an integral role of enabling the creation of customer value. Implication for Marketing Managers The report findings have significant implications in the area of marketing and management and especially for marketing managers. The different approaches to creating customer value are based on understanding customer needs. The finding on how proactive customer orientation creates high customer value requires that marketing managers adapt enhanced ways of understanding customer needs. Blocker, et al. (2011), findings also imply that managers should invest in analytical processes as well as systems that have the ability to advance the understanding of changing customer needs, values, and expectations such as data mining and business intelligence. Overall, marketing managers should realize that they need to continuously interact and make efforts to understand what customers expect or need in the future. Therefore, marketing managers should not look for customer expectations or needs when launching a new product and then relax until the launch of a new product. Understanding the needs of the consumer should be a continuous process for the modern marketing managers in order to realize customer value. Another major implication for managers is based on strategically linking customer value to value for the businesses. In this case, creating customer value can be a process of enhancing competitive advantage. However, this can only be achieved by removing all the customer value gaps in marketing. It is through this that Rajagopal’s (2006), finding on the role of communication, brand positioning, and product delivery in creating customer value that managers should consider all necessary elements that help in creating customer value. This means that marketing managers should work on ensuring that their marketing strategies encompass all the necessary essentials to realize increased customer and business value. Therefore, marketing managers should not underestimate the need to incorporate issues such as brand positioning, referral programs, communication, and product delivery. Additionally, the use of specific marketing strategies tends to create value for consumers and the business. Schmitt, et al. (2011), study findings illustrate that the use of referral programs makes it inexpensive to acquire new customers and create customer value. Therefore, managers should focus on adopting innovative strategies that are in line with the business needs. The last implication for managers in this report applies to the use of technology. Almost all businesses in the world have an online presence where they interact with their customers. In this case, managers should note that use of e-commerce or social media can play a role in creating customer value. Michałowska, et al. (2015), study found that online shoppers selected their preferred online shops based on their experiences, communication, prices, and product variety. In this case, managers should always focus on ensuring that communication remains effective in the marketing plan. Customers should be kept engaged through all communication platforms. Moreover, Ming-Hsien, et al. (2014), study offers a wider perspective on the role of social media when it comes to creating customer value. Managers should utilize social media effectively by allowing consumers to the ability to inquire and get response about certain products. Moreover, managers should also create the ability to propose changes or offer suggestions through the social media platforms. All these efforts are aimed at ensuring that the customer has a role or opportunity to indulge in the creation of customer value. Managers should allow customer to experience, engage, and play their role in the creation of customer value. Overall, the reports implications for marketing managers is developing strategies that focus on increasing the continuous understanding of customer needs, perspectives, anticipations, and expectations. To effectively achieve this, marketing managers must consider technological, strategy, and effectiveness of customer value creation options. Recommendations The report does develop numerous recommendations based on the area of creating customer value. One of the main features of creating customer value is not associating marketing strategies to the whole process. Most of the themes identifiable from the reviewed articles are that they relate to the general management perspective. Nonetheless, creating customer value should not be based solely on management, but rather as a marketing element. In this case, future research should focus on adopting a marketing perspective that requires the development of a marketing strategy. Customer value is created through the different marketing strategies. Applicability of customer value propositions is also important in ensuring increased research reliability. Another major recommendation on creating customer value research is focusing on developing units or conceptual metrics for measuring consumer value. This value may be measured in cost or psychological means. In this case, future research should focus. Overall, the report has presented significant recommendations for future investigation on creating customer value. Conclusion In conclusion, this report offers a critical evaluation on the strategies, gaps, and role of technology in creating customer value. In this regard, the report has adopted five article journals on creating customer value. These research articles focus on different methods of creating customer value, the gaps in these strategies, and role of technology in creating customer value. The articles apply numerous empirical research methodologies that focus on literature analysis and primary data collection methods including interviews and surveys. The major findings of the report illustrate that the key components creating customer value include communication, ability to predict effectively on customer needs in advance, and ability to utilize technology effectively. In fact, there are numerous strategies for creating customer value, but all are based on one major element. This is the ability to continuously predict, understand, and adapt to the changing consumer needs, perceptions, preferences, and expectations. Marketing managers should emulate marketing models that are based on this goal or objective. References Blocker, C. P., Flint, D. J., Myers, M. B., & Slater, S. F. (2011). Proactive customer orientation and its role for creating customer value in global markets. Journal of The Academy Of Marketing Science, 39(2), 216-233. Michałowska, M., Kotylak, S., & Danielak, W. (2015). Forming relationships on the e-commerce market as a basis to build loyalty and create value for the customer: Empirical findings. Management (1429-9321), 19(1), 57-72. Ming-Hsien, Y., Chang-Tang, C., Ya-Yun, C., & Chin-Chuan, H. (2014). Customer Value and Customer Roles on Social Media: A Travel Agency Case Study. International Journal of Business & Information, 9(4), 411-432. Rajagopal. (2006). Measuring Customer Value Gaps: An Empirical Study in the Mexican Retail Market. Economic Issues, 11(1), 19-40. Schmitt, P., Skiera, B., & Van den Bulte, C. (2011). Referral Programs and Customer Value. Journal of Marketing, 75(1), 46-59. Appendices Appendix 1 Author (s) DV=Dependent Variable IV=Independent Variable Relationship with DV Measurement used Country Method Number of Respondent & Response Rate Population size Survey method Unit of Analysis Schmitt, P., Skiera, B., & Van den Bulte, C. (2011) DV=customer value IV=referral programs Referral programs offer higher quality customer value Customer value Germany Quantitative 10,000 respondents Mail Surveys Extent to which referral programs enhance customer value Ming-Hsien, Y., Chang-Tang, C., Ya-Yun, C., & Chin-Chuan, H. (2014) DV-Customer value IV-social media The nature of the influence of social media on customer value Customer value Taiwan Qualitative Conceptual analysis The role of social media in creating customer value. Michałowska, M., Kotylak, S., & Danielak, W. (2015) DV-E-commerce users IV-The e-commerce businesses E-commerce businesses determine their customer’s value Customer value International Quantitative 349 respondents Questionnaire survey Effectiveness of using e-commerce and the extent it creates customer value Blocker, C. P., Flint, D. J., Myers, M. B., & Slater, S. F. (2011) DV-customer value IV-businesses service providers Consumers rely on their business to create value through proactive orientation. Customer value Global Qualitative Interviews The relationship between proactive customer orientation and customer value Rajagopal. (2006). DV=customer value IV= retail market Retail markets offer consumer with increased value Customer value Mexico Quantitative 369 respondents Survey The customer value gaps that are illustrate in retail markets Read More