Modeling the Customer Value Generation in the Industry's Supply Chain

Modeling the Customer Value Generation in the Industry's Supply Chain

Milton M. Herrera (Universidad Militar Nueva Granada, Bogota, Colombia), Lina A. Carvajal-Prieto (Universidad Piloto de Colombia, Bogota, Colombia), Mauricio Uriona-Maldonado (Federal University of Santa Catarina, Florianópolis, Brazil) and Fernando Ojeda (Universidad Piloto de Colombia, Bogota, Colombia)
Copyright: © 2019 |Pages: 13
DOI: 10.4018/IJSDA.2019100101

Abstract

This article shows that customer value generation has drivers, which could be different according to each stakeholder within the electricity industry, affecting its growth. Each stakeholder has different interests that affect the decision-making process and the customer value perception in the long term, which impacts on profitability. In order to illustrate how to identify and model key performance drivers to evaluate creating value in the electricity utility industry, this study used a simulation with the system dynamics methodology. Through simulation scenarios, this study shows that, the high customer value perception allows the electricity utilities industry to create more value. This is illustrated with the case of some electricity utilities engaged in the generation and distribution in the Colombian electricity market. The results show a new point of view that contributes to marketers and engineers in the analysis of the relationship between the stakeholders and electricity firms.
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Introduction

Recently, renewable energy market has shown significant growth that has contributed in competitiveness of the Latin American countries (Castaneda et al., 2017; Gómez et al., 2017; Herrera et al., 2017a; Mastropietro et al., 2014). The rapid growth of the renewable energy market has provoked serious challenges because of: the significant financial resources that are required, highlighting the need for marketing of the utility industry in the electricity sector (Aslani et al., 2018; Gholizad et al., 2017; Paladino and Pandit, 2012). Considering that now customers are best informed and more demanding, it is a priority to give more value and consider the stakeholders when determining which improvements are needed (Kumar and Reinartz, 2016; Nikabadi and Amir, 2018). The value that utility industry delivers to stakeholders is opportunity to build a different point of view of products offer for sale.

Given that the customer perception contributes to industry and commercial development (Kotler, 2017; Paladino and Pandit, 2012), the role of value perception influence on customers image, which affect demand changes and financial resources used by the electricity utility industry. Thus, the value generation of electricity utility industry influences on citizens’ perception and allows appropriating technologies innovation related with non-conventional renewable energy (Herrera et al., 2017b), such as solar power.

One of the fastest growing products for the electricity industry is rooftop solar panel of greater use in the residential sector. In the case of Colombia, the potential of solar energy is very high, solar radiation to reach a daily average of 4.5 kWh/m2, which exceed the world average daily of 3.9 kWh/m2 (UPME and BID, 2015). Currently, the Colombian government has taken an important step to support the deployment of renewable energy through law 1715, however this law has not properly implemented (Herrera et al., 2018b). Although solar power has great potential in the household sector as well as positive impacts on emission reduction (Cardenas et al., 2016, 2017), Colombia has not developed residential market sufficiently, which not allow rapid response to the challenges of household market. In response to this concern, there is interested in understanding the effects of value generation on customer image of utility industry.

The management literature on value is clustered generally around three categories of value: financial economists advocate shareholder value, marketers advance customer value, and stakeholder theorists promote stakeholder value (Salem Khalifa, 2004). If companies apply these categories to implement new tactics is possible to have a better understanding of the consumer needs.

The concept of value has been extensively studied in the marketing literature, but few studies related to the value generation of electricity utility industry (Salem Khalifa, 2004). This paper attempts to present a framework about this topic, in order to understand the importance of customer value in the electricity utilities industry. The proposed simulation model is supported by system dynamics methodology. To understand the dynamic effects of customer value generation, the model represents citizen satisfaction and its effects on financial resources employed by utility industry in Colombia. In this case, the perception of customers is intangible resource that affect utility industry performance and competitiveness (Bianchi et al., 2015; Cosenz, 2017). Thus, this paper provides a model-based framework for analyzing intangible resources and offers guidance for designing alternative marketing policy formulations.

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