Maximizing Value for Customers

Maximizing Value for Customers

Minwir Al-Shammari (University of Bahrain, Bahrain)
Copyright: © 2009 |Pages: 45
DOI: 10.4018/978-1-60566-258-9.ch009
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Abstract

Efforts to improve the experience of customers do little to boost customer satisfaction and loyalty if they fail to connect with customers and anticipate their needs. The first chapter of this last part of the book deals with the CKM harvesting phase. A process-oriented customer-centric enterprise needs to know its customers and to be resilient and vibrant towards them and their preferences by creating and delivering superior value offerings that suit their desired needs and/or preferences. Doing good things for customers reciprocates good things for business. As the long-term objective of a competitive business strategy is to build SCA, focus should be on ‘difficult-to-imitate’ resource-based capabilities (Salck et al., 2006). The CKM strategy is adopted in order to leverage business DCCs, i.e. CK, to deliver highest value-adding (VA) products and/or services to customers, and achievement of SCA for organizations.
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Conceptual Foundations

The business environment of the 21st century is characterized by extremely tight competition between companies. Companies are forced constantly to reduce costs and outperform their rivals. However, as customers increasingly are becoming demanding and pressuring organizations for higher quality products and/or services, competing only with price is becoming very risky. Although efficient and cost-based operations have been traditionally adopted, other bases of competition need to be put in place.

Business organizations strive to satisfy the minimum expectations of their stakeholder groups, including customers. Businesses aim to deliver satisfaction levels above the minimum for different stakeholders: companies might aim to delight their customers, perform well for their employees, and deliver a threshold level of satisfaction to their suppliers (Kotler, 2006). For convenience only, the view of consumers in the B2C context may have been emphasized in this as well as the subsequent chapter. However, the adopted definition of customers in this book is much broader and includes more than individual consumers; it encompasses groups such as business customers, civilians in the Government, patients in healthcare, etc.

This section of the chapter covers the following parts: customer segmentation, customization, mass customization (MC), MC examples, and ICT requirements for MC.

Customer Segmentation

In recent years, the role of marketing has changed radically. Instead of interacting with large simultaneously numbers of customers, the new role is to interact with individual customers, focusing on the specific needs of that customer through customer segmentation.

Customer segmentation and analysis is the process that seeks to understand customers better, and increase revenue and retention by dividing a customer base into groups that share similar characteristics, based on demographics such as attitude and psychological profiles (e.g., age, gender, interests, and spending habits). Value-based customer segmentation, on the other hand, looks at groups of customers in terms of the revenue they generate and the costs of establishing and maintaining relationships with them.

Usually, only a few broad segments would be defined based on overall demographic information, such as older users and young users. However, with utilization of advanced data storage and analysis systems, it is possible to define many more segments at a much finer and finer level of precision. It is now possible to define the segments based on their value and volume of interactions with the company (rather than general demographic information) and to automate different responses to each segment. However, CKM needs to address the issue of segment granularity- how small the customer segments may be before they become too many for the organization to handle (Knox et al., 2003)Market segmentation follows three approaches (Hill and Jones, 2007):

  • No market segmentation, wherein a product is targeted at the ‘average customer’,

  • High market segmentation, in which a different product is offered to each market segment, and

  • Focused market segmentation that offers one product to one or a few market segments.

Customer-centric services include three types:

  • Customization for customers (e.g., DELL)

  • Modularization

  • Bundling (cross-selling and up-selling)

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