PRINCIPLES KF MARKETING.pdf

Unit 1: Marketing Principles and Strategies Lesson 1.2 Goals in Marketing Contents Introduction 2 Learning Objectives 3 Quick Look 3 Learn the Basics 5...

Unit 1: Marketing Principles and Strategies Lesson 1.2 Goals in Marketing Contents Introduction 2 Learning Objectives 3 Quick Look 3 Learn the Basics 5 Developing Marketing Goals 5 Mission Statement 5 Vision Statement 7 Goals and Objectives 9 Key Performance Indicators (KPIs) 12 Common Marketing Goals 14 Acquire New Customers 15 Retain Customers 15 Upsell and Cross-Sell 16 Increase Customer Satisfaction 16 Launch New Products 16 Improve Product Position 17 Case Study 17 Keep in Mind 18 Try This 19 Practice Your Skills 21 Challenge Yourself 23 Bibliography 24 Unit 1: Marketing Principles and Strategies Lesson 1.2 Goals in Marketing Introduction What are your goals for your future? Why did you choose the Accountancy, Business, and Management (ABM) strand for your Senior High School education? Is taking this strand a step toward achieving your goals? What other actions do you need to take? In life, there are several critical decisions that you need to make. Having clear goals would help you weigh the options and opportunities available for you. 1.2. Goals in Marketing 1 Unit 1: Marketing Principles and Strategies Goals are sources of vision, direction, and clarity. They guide your periodic decisions and actions, such as what to do this week, month, quarter, or year. These time-bound activities that progress toward achieving your goals and attaining success are essential elements of an effective plan. Setting goals and objectives is essential for individuals, more so for businesses and companies. Business leaders make sure that every action contributes to the company’s achievement. They use tools and mechanisms to describe their position and measure their progress in attaining success. This lesson will teach you the importance of marketing goals, objectives, and other success indicators.. Learning Objectives DepEd Competency In this lesson, you should be able to do the Discuss the goals of marketing following: (ABM_PM11-Ia-b-3). Identify the components of marketing goals and objectives. Plan marketing goals, objectives, and key performance indicators. Discuss the importance of establishing marketing goals. Quick Look What’s Your Goal? Setting up goals is practical for individuals and organizations because it directs attention to their desired outcomes. For example, most students would aim to complete their studies, land a stable job, and contribute to the developments in their chosen field. However, how could they do that? What tools do they need to achieve these goals? What actions would 1.2. Goals in Marketing 2 Unit 1: Marketing Principles and Strategies contribute to its realization? What are the do’s and don'ts? These questions also apply to businesses, their departments, and their workforce. For business organizations, goals and objectives are foundations of success. Goals are vital tools in establishing an organization’s destination, direction, and standards. Well-organized goals allow companies to determine their short-term and long-term targets. Meanwhile, objectives are organized as periodic milestones toward achieving the set goals. A set of specific, realistic, and measurable objectives could be an effective tool in monitoring and analyzing the company’s performance. Goal and objective setting coupled with monitoring and evaluation could boost a company's productivity and performance. Questions to Ponder 1. What vital functions do goals and objectives provide to organizations? ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ 2. What do you think would happen if a business organization does not have well-organized goals and specific objectives? ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ 3. Suppose you are part of an organization. Why would it be important for you to learn its goals and objectives? ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ 1.2. Goals in Marketing 3 Unit 1: Marketing Principles and Strategies Learn the Basics Business goals establish the organization's desired outcome, direction, and standards. Thus, goals also represent the company's overall purpose and mission. These goals communicate what the whole organization strives for, and every leader, department, and employee should contribute toward their achievement. Since marketing is part of business processes, marketing goals and objectives relate to the company's overall mission. Businesses want to succeed in a particular market; thus, they establish marketing goals to reach a specific target demographic, communicate the product's or service's value, and build strong customer relationships. Marketers determine the courses of action—a plan or strategy—to achieve these goals and contribute to the company's overall success. Essential Question What is the benefit of transforming overall goals into attainable objectives? Developing Marketing Goals Effective marketing requires a well-thought-out, well-informed marketing plan; however, establishing marketing goals and objectives is the beginning of a successful marketing plan. The inception of a marketing plan should consist of the following: mission statement, vision statement, core values, goals and objectives, and key performance indicators (KPIs). Mission Statement A mission statement explains the company’s purpose and primary goals. An excellent mission statement is clear, meaningful, and inspiring. It is stated in a brief but impactful manner and is written in the present tense. Furthermore, a company should communicate its mission statement to every stakeholder1. Stakeholder (noun) —a party that has an interest in a company that can either affect or be affected by the business. 1 1.2. Goals in Marketing 4 Unit 1: Marketing Principles and Strategies Some examples of mission statements are the following: "To motivate and encourage every athlete in the world." "We aim to be the most customer-focused organization on the planet." "By winning with a purpose, we strive to become the global leader in handy meals and beverages." Creating a mission statement consists of the following steps: 1. Develop a unique selling proposition (USP) to establish the company's "winning idea" against its competitors. The USP attracts customers and distinguishes a company from other companies that offer similar products or services. 2. Clarify the company's goals and list the most critical success indicators. 3. Combine the "winning idea" and the company's goal to develop a clear statement that conveys the company's purpose, outcomes, and metrics. Closer Look Creating a Mission Statement A firm that produces farm products determined that its winning idea is to "deliver farm freshness." Furthermore, it established two critical success indicators: product quality and customer satisfaction. Incorporating the winning idea and success criteria, the firm established the following mission statement: "To be the best produce shop in Main Town by supplying the highest-quality, freshest agricultural items straight from the farm to have happy customers." 1.2. Goals in Marketing 5 Unit 1: Marketing Principles and Strategies Vision Statement A vision statement expresses what the business aspires to become in the world. It articulates the outcome that it envisions through the achievement of its mission statement. Vision statements are ideal long-term goals and are evergreen; meaning, even if the organization's strategy changes, the vision generally remains constant. Some examples of vision statements are the following: "Providing the finest in cosmetics innovation in terms of quality, efficacy, and safety to all women and men globally." "We will assist individuals in living longer, healthier, and happier lives." "Assisting content producers all around the world in reaching a worldwide audience." Creating a vision statement consists of the following steps: 1. After defining the mission statement, determine the business’s human worth or purpose. Organizations must consider these questions: "How does your business make a difference in people's lives?" and "What can your business do to make the world a better place?" 2. Determine the values that matter most to the organization, its customers, and other stakeholders. Companies must refine these values to select what they possess or should possess. Examples of company values include excellence, integrity, teamwork, originality, equality, honesty, freedom, service, and strength. 3. Combine the ideas on the business’s human worth and the company’s values to form a statement that could inspire individuals within and outside the organization. The message should be timeless and should explain why the people in the company do what they do. 1.2. Goals in Marketing 6 Unit 1: Marketing Principles and Strategies Closer Look Creating Vision Statements After thoroughly studying the company's organization and culture, the owner identifies three common values: freshness, tastiness, and "localness" of the food. Here is the vision statement that expresses both the company and the human values: "By bringing the freshest, tastiest, and most nutritious local products from local farmers to Main Town families’ tables, we inspire Main Town families to live happier and healthier lives." Check Your Progress Compare and contrast mission and vision statements. _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ Core Values Company values or core values are a collection of guiding principles and essential beliefs that empower individuals to operate as a team toward a common business goal. Having a defined set of company values guarantees that all employees are guided in their work toward the company's goals. Core values are guiding principles that help shape the company's mission and support its vision. They also influence the company’s culture and have an impact on its business strategy. In an organization, core values contribute to developing a purpose, improving team cohesiveness, and instilling a feeling of dedication in the workplace. 1.2. Goals in Marketing 7 Unit 1: Marketing Principles and Strategies Company values do not have to be one of a kind. Instead, they reflect what the company wants to see in itself and how the employees see the company. A company that lacks core values is not a company. It would lack the tenacity to develop outstanding teams, provide exceptional customer service, and drive innovation. Goals and Objectives Some organizations use the terms goals and objectives interchangeably when discussing their plans and strategies. To utilize these tools effectively and avoid misunderstanding, companies should know the essential nuances between the two. A goal is a broad aim established to start the business planning process, while an objective is a specific milestone reached to achieve a goal (Root 2016). While goals provide an overall vision, objectives concentrate on specific, attainable achievements. Goals can be the starting dialogue when determining the needed actions to assist business growth. They are also written down and utilized to build the business strategy framework. The actual deliverables2 that bring goals to life are called objectives. When businesses monitor progress toward meeting an objective, it can also track their progress toward achieving a broader goal. Table 1. Characteristics of Goals and Objectives Goal Objective It consists of general ideas and broader It consists of specific statements with limited aims. scope. It establishes a general direction or It determines actions that are more specific vision. than goals. It is challenging to measure. Its progress is measurable and manageable. Deliverable (Noun) - It's a term to define the quantifiable items or services that must be delivered at the end of a project. 2 1.2. Goals in Marketing 8 Unit 1: Marketing Principles and Strategies It uses abstract concepts and is not It uses attainable milestones associated with a necessarily time-bound. timetable or schedule. It has a long-term vision. It consists of short-term or long-term targets. It is the final product of all the fulfilled It is organized to achieve the goals objectives. progressively. Below are some examples of goals: I want to be acknowledged as a corporate strategy specialist. I will devote myself to my professional growth and discover how to boost sales. By September 15, I intend to form a special-purpose team dedicated to increasing employee engagement. Below are some examples of objectives: In the coming year, I'll be speaking at five conferences. I'll read one book about sales strategy every month. I'll be working with a coach to practice my networking skills by the end of the month. Check Your Progress Compare and contrast goals and objectives. _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ SMART Marketing Objectives By recalling the previous section, goals have broader aims than objectives. Objectives organize and operationalize the achievement of goals; therefore, objectives have to be specific, measurable, achievable, relevant, and time-bound. Organizations typically use the SMART criteria to determine and design their objectives. 1.2. Goals in Marketing 9 Unit 1: Marketing Principles and Strategies Figure 1. The mnemonic SMART refers to the principle of developing objectives. 1. Specific: Objectives are clear and detailed, leaving no room for confusion or misinterpretation. Organizations consider the five Ws (who, what, when, where, and why) in developing their objectives. 2. Measurable: Objectives specify the metrics to assess the organization’s performance. Organizations should be able to measure their progress through the use of units, numbers, and figures. 3. Achievable: Objectives set targets that the team could accomplish. Organizations consider its resources, opportunities, and capabilities to determine attainable milestones. 4. Relevant: Objectives align with the individual and organizational goals. Organizations design worthwhile activities that directly address their current needs and advance their progress toward achieving their aims. 5. Time-bound: Objectives are set to be accomplished in a given date, timeframe, or deadline. The time element expresses the long-term and short-term objectives as well as the priorities at any given time. Through this, organizations can periodically assess their performance and progress. 1.2. Goals in Marketing 10 Unit 1: Marketing Principles and Strategies Closer Look Applying the SMART Criteria The company that supplies and sells farm produce in the Main Town aims to expand its business operations in the next five years. How can the company transform this goal into SMART objectives? Here are some examples: 1. To open three additional branches throughout the country—one in Luzon, one in Visayas, and one in Mindanao 2. To increase company revenue by 15% annually 3. To increase production capacity by 25% in the Laguna production facility 4. To increase staffing by 20% and assign an equal amount of people to each of the branches Key Performance Indicators (KPIs) Key Performance Indicators (KPIs) are quantifiable measures that organizations use to describe their performance and track their progress against a specific objective or target. While objectives define the desired long-term and short-term outcomes, the KPIs demonstrate how effectively these outcomes have been achieved. The function of the KPIs is similar to those meters found in a car’s dashboard. The dashboard symbols inform the driver how much fuel is left in the tank and how fast or slow the vehicle is going. The meters provide real-time measurements of the car's overall health. Similar to these dashboard meters, KPIs inform the organization’s leaders and members of the direction and speed of their achievements. Evaluation through the use of KPIs can assist businesses in concluding whether or not they are on the right track of achieving their goals and, if not, where they should focus their efforts. Regardless of what it measures, a KPI's aim is to promote organizational health. 1.2. Goals in Marketing 11 Unit 1: Marketing Principles and Strategies Effective planning usually sets five to seven KPIs to oversee and track. Here are some of the elements that comprise a structured KPI: measurement: Quantifiable outcome expected target: Period when to achieve the objective data source: Means to get the data to be analyzed reporting frequency: Period when to monitor progress Closer Look Creating Key Performance Indicators Consider this business objective: “To increase sales revenue by 15% for the next three months.” From the stated objective, there are several possible KPIs: KPI 1: Increase website traffic to 1,000 new customers by the end of the month. Measurement: 1000 new customers Target: By the end of three months Data source: Insights from company's website Reporting frequency: Monthly KPI 2: Increase email subscriptions by 500 new customers every month. Measurement: 500 new customers Target: Every month Data source: Insights dashboard from the company's email management system Reporting frequency: Monthly 1.2. Goals in Marketing 12 Unit 1: Marketing Principles and Strategies Common Marketing Goals Company mission, vision, goals, and objectives are guiding stars for every leader, department, and employee as they make decisions and take action regularly. Organizations use KPIs to measure the performance and progress toward achieving the predetermined objectives. The marketing department operates in the same manner. Identifying and defining marketing goals are the starting points in planning and strategizing marketing activities. As mentioned in the previous lesson, the overall goal of marketing is to establish and maintain profitable customer relationships. This broad aim is broken down into specific marketing goals: acquiring new customers, retaining customers, upselling and cross-selling, increasing customer satisfaction, launching a new product, and improving product position. These goals provide an anchor to every marketing decision and activity. Figure 2. Marketing goals assist in establishing and maintaining customer relationships. 1.2. Goals in Marketing 13 Unit 1: Marketing Principles and Strategies Acquire New Customers Customer acquisition is the process of drawing in new customers or clients. This process aims to create a systematic, sustainable acquisition strategy that evolves with recent trends and changes. In acquiring new customers, companies follow a road map called the buyer's journey—the process in which buyers become aware, consider, and decide to buy a product or avail a service. Nowadays, companies use tools to track how far along customers are in the buyer's journey, and these help businesses maximize their efforts toward bringing in the right customers. Figure 3. Understanding the buyer’s journey is important in acquiring new customers. Retain Customers Customer retention refers to the activities and efforts made by companies and businesses to increase customer loyalty. Customer-retention programs aim to assist businesses in retaining as many customers as possible, generally through customer-loyalty and brand-loyalty activities. 1.2. Goals in Marketing 14 Unit 1: Marketing Principles and Strategies Membership cards and buyer club rewards are two of the most common forms of customer-retention strategies. For instance, a famous coffee shop awards frequent buyers a special gift if they purchase coffee for a specified number of times. Upsell and Cross-Sell Also known as suggestive selling, upselling is the activity of persuading customers to buy an upgraded or more expensive version of a product or service. This sales tactic maximizes profit and provides better customer experience. You may have observed this while getting a haircut. Hairdressers would often suggest additional services to improve your hair-salon visit. Cross-selling is a sales approach that encourages customers to spend more by recommending a product related to the one they are already purchasing. Cross-selling tactics can be present even while the customer is still choosing an item. You may notice e-commerce platforms having a “Recommended for You” section or ”Add These to Your Cart” prompts. Increase Customer Satisfaction Bear in mind that the key to increased customer satisfaction is consistency in providing positive customer value. Although customers perceive value differently, the product or service performance should consistently exceed their expectations. This way, customer value is positive and high. If brands deliver consistent customer satisfaction over time, they effectively achieve the second goal: customer retention and loyalty. Some strategies to increase customer satisfaction include providing new products and solutions with better performance and enhanced features. This strategy is especially useful if customers’ feedback shows that they are willing to pay higher prices for a better experience. Launch New Products A product launch is a coordinated effort to bring a product to market and announce it to the public. The marketing plan outlines the messaging and marketing strategy for effectively convincing customers to adopt the new product. 1.2. Goals in Marketing 15 Unit 1: Marketing Principles and Strategies You may have observed product launches in social-media platforms where the usual content contains announcements leading to the launch. Or you may see some videos featuring tech moguls talking about their latest smartphone or car model. This type of strategy creates hype and leads audiences to stay tuned. By the time the product is launched into the market, many customers are already interested in purchasing the product. Improve Product Position When you're meeting someone for the first time, you need to make the right first impression. The same idea applies when businesses position their product in the market. Product positioning is the strategy of deciding and presenting how the market sees, thinks, or feels about the company’s product compared to the competing ones. Product positioning affects all aspects of branding and influences how businesses present and share their product and service to the public. It also affects how the people in the entire organization communicate the brand. How do you feel when you visit your favorite fast-food or clothing store? Do these stores emit a particular character? What you see, feel, and think about the experience could be how brands wanted to position themselves in the market. Case Study A Technology Company’s Mission and Vision A multinational technology corporation's corporate mission and vision statements emphasize innovation for worldwide social progress through technical goods. The firm's mission statement suggests authority, quality, and leadership in its respective industry, while its vision statement supports an inspiration-focused strategic goal that positions the firm as a global influence. 1.2. Goals in Marketing 16 Unit 1: Marketing Principles and Strategies By integrating its corporate vision and mission statements, the tech giant emerged as an industry leader and affected the global community. Samsung’s Mission Statement & Vision Statement (An Analysis) Victoria Martin, “Samsung’s Mission Statement & Vision Statement (An Analysis),” Panmore Institute, March 18, 2019, http://panmore.com/samsung-corporate-vision-statement-corpo rate-mission-statement-analysis, last accessed on November 7, 2021. Keep in Mind Establishing goals is one of the first steps in developing a good marketing strategy. It lays down the actions that the company must take to succeed in the market. The inception of a marketing plan includes the creation of a mission statement, a vision statement, core values, and marketing goals and objectives, complemented by key performance indicators (KPIs) to help monitor the business’s progress in achieving the predetermined goals. The overall goal of marketing is to establish and maintain profitable customer relationships. Thus, common marketing goals include acquiring new customers, retaining customers, upselling and cross-selling, increasing customer satisfaction, launching new products, and improving product position. These marketing goals guide the everyday decisions and actions of the company, marketing department, and employees. 1.2. Goals in Marketing 17 Unit 1: Marketing Principles and Strategies Try This A. Modified True or False. Write true if the statement is correct. If false, replace the underlined word or phrase with the correct answer. ________________ 1. Goals express broad aims, while objectives focus on specific and actual accomplishments. ________________ 2. If a brand delivers consistent customer acquisition, it earns the customer’s loyalty. ________________ 3. Objectives are principles and beliefs that guide employees in working together to achieve the company’s goal. ________________ 4. SMART means specific, measurable, attainable, realistic, and time-bound. ________________ 5. Mission statements are quantifiable performance measures used to define a company’s success elements and track its progress toward achieving its objectives. 1.2. Goals in Marketing 18 Unit 1: Marketing Principles and Strategies Lesson 1.3 Traditional Approaches in Marketing Contents Introduction 1 Learning Objectives 2 Quick Look 3 Learn the Basics 4 Production Concept 5 Product Concept 6 Selling Concept 8 Case Study 10 Keep in Mind 11 Try This 12 Practice Your Skills 13 Challenge Yourself 15 Bibliography 16 Unit 1: Marketing Principles and Strategies Lesson 1.3 Traditional Approaches in Marketing Introduction As a consumer, how do you choose between different product brands? Is price a primary consideration for you? How about the attributes and the qualities of the product itself? Do you often go with popular brands, or do you find less-advertised brands equally appealing? You learned in the previous lesson that acquiring and retaining customers are among the common marketing goals. To determine an effective marketing strategy, marketing professionals tried to understand the thought process of consumers when choosing 1.3. Traditional Approaches in Marketing 1 Unit 1: Marketing Principles and Strategies between brands. Since marketers discovered that product, price, and promotion typically influence the decisions of consumers, traditional marketing tended to focus on these aspects. In this lesson, you will learn about traditional marketing approaches. You will explore the fundamental ideas that guide marketers in formulating and building the company’s marketing strategies. More importantly, you will learn that the achievements of traditional marketing formed the basis for the development of contemporary marketing strategies. Learning Objectives DepEd Competency Describe the traditional approaches to In this lesson, you should be able to do the marketing (ABM_PM11-la-b-3). following: Describe the traditional approaches to marketing. Examine the marketing approach used in a given situation. Distinguish the different concepts in traditional marketing from one another. 1.3. Traditional Approaches in Marketing 2 Unit 1: Marketing Principles and Strategies Learn the Basics In the previous lesson, you learned that marketing is the process of creating, communicating, and delivering value to the target market profitably. Moreover, you already know that every product offered out there aims to meet the needs and wants of customers. Marketing professionals have developed various strategies to earn consumer confidence and build profitable, long-lasting relationships with their customers. Traditionally, three marketing concepts have been used in various degrees and combinations. These marketing concepts deal with production, product, and selling. Marketers find these concepts useful, especially when the business focuses on generating demand and ensuring that consumer-facing1 products turn into sales. However, it is important to note that the business environment constantly changes and evolves. Consumer insights are influenced by culture, trends, technology, and other factors. Thus, marketing approaches and strategies evolve accordingly. Although being less used nowadays, it is still important to learn about the earlier marketing concepts to understand how the contemporary approaches developed. Additionally, many companies still appreciate the usefulness of these traditional concepts despite the shift towards newer approaches. Essential Question Should business organizations still use the traditional approaches in marketing? Marketing concepts are the fundamental philosophies and ideas used by companies to approach the marketplace. It consists of assumptions that affect how marketing strategies are designed and implemented to achieve the outlined goals. Before the digital and internet era began, the companies employed traditional concepts that are product-based and product-focused. On the other hand, contemporary approaches are more customer-driven and consumer-focused. Consumer-facing — (adj.) directly interacting with consumers. 1 1.3. Traditional Approaches in Marketing 4 Unit 1: Marketing Principles and Strategies Figure 1. The traditional approach toward the marketplace is product-based. Production Concept The production concept is considered one of the oldest philosophies in marketing. It assumes that consumers favor products that are widely available and more affordable than others. For instance, consumers who want to buy an item will go to the nearest convenience store and choose those products within their budget. The production concept leads companies to focus on improving their production and distribution effectively and efficiently. If production is efficient, more products are produced, prices are kept low, and sales would increase. Thus, companies who apply this principle focus on lowering the production costs and selling price by expanding and scaling production and mass distribution. This concept is useful when product demand exceeds the current supply and when the cost of production is too high. Improving production and distribution efficiency allows companies to introduce the product to the market at a much lower price, thereby gaining new customers from the multitudes demanding the product. 1.3. Traditional Approaches in Marketing 5 Unit 1: Marketing Principles and Strategies Figure 2. Products are manufactured in large quantities to minimize production costs. Check Your Progress Can you think of a specific situation when the application of the production concept was effective in increasing sales? _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ Product Concept The product concept assumes that consumers prefer and patronize products that offer the highest quality, performance, and features. For example, consumers who want to buy gadgets are willing to spend more if it has a faster processor, bigger memory capacity, functional design, among others. Business organizations that utilize this concept devote their time and resources to make continuous product improvements. The product concept leads companies to focus on innovation, enhancing the product attributes, and improving its features to be ahead of the competition. 1.3. Traditional Approaches in Marketing 6 Unit 1: Marketing Principles and Strategies This concept is useful for industries whose customer base has specific needs that constantly develop. It fosters innovation and gets the best quality product out there. When applied effectively, it delivers products and services that exceed customer expectations, raises the benchmark in the market, and poses a big challenge to the competitors. However, this concept may lead to more expensive products. Focusing too much on enhancing a specific product may neglect the customer’s changing needs and preferences. For example, a pest-control company may believe that people need better and more improved mousetrap than more efficient ways to eliminate the pests. Figure 3. Product concept holds the idea that customers prefer quality products. Check Your Progress Compare how companies apply the production and product concepts. _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ 1.3. Traditional Approaches in Marketing 7 Unit 1: Marketing Principles and Strategies Selling Concept The selling concept assumes that consumers will not buy a product unless the company engages in a large-scale selling and promotion effort. This concept also promotes the idea that through advertising, customers may be convinced to buy a product they did not have an interest in before. It holds the principle that if a product is effectively advertised, the customers would want it. For example, a customer may not be interested in an insurance policy, but after the sales agent presented the advantages of having one, the customer eventually decided to buy it. The selling concept leads companies to conduct aggressive selling and promotional efforts to persuade timid customers in their target market. It aims to sell what has been produced rather than provide what the market needs and wants. This concept is beneficial when the company's products are considered unsought goods2. It is important to take note that promotional activities can be expensive. So when applying this concept, companies should be good at tracking down their potential customers and identifying where they are concentrated. This way, their promotional activities will be targeted and maximized. However, the risk in applying this concept is the tendency of companies to neglect the actual needs and wants of the market. Figure 4. A fire extinguisher may be an example of an unsought good. Unsought goods — (adj.) products that are not immediately wanted 2 1.3. Traditional Approaches in Marketing 8 Unit 1: Marketing Principles and Strategies Closer Look MJ’s Studio MJ is a professional photographer in one of the well-known photo companies in the Philippines. After five years of working, he decided to put up a studio near his hometown. He came up with ideas like customizable photo sets and creative photoshoots that he and his customers decided on. Despite his passion for these new ideas, customers were not coming to avail the services from his studio. He tried to advertise his studio and photography services intensively. He reached out to some of his friends who have become social media influencers. They helped popularize his brand and its services, successfully converting prospects into customers. During his two years in the photography business, he has been profitable enough to buy new camera equipment that is more expensive than a brand new car. The selling concept proved to be effective in MJ’s business endeavors. Based on the situation, it showed how his promotional efforts paid off after two years. It might have been difficult for MJ to maintain his business if he had not convinced the customers to avail of his services. 1.3. Traditional Approaches in Marketing 9 Unit 1: Marketing Principles and Strategies Case Study From Traditional to Digital A health and wellness company was one of many small and medium-sized businesses affected by the coronavirus pandemic. Prior to economic restrictions, the company used traditional selling methods. They operated booths at visible areas of shopping malls where sales agents encouraged passers-by to try their products. When the pandemic forced its mall outlets to close down, the firm embraced the digitization of its business operations. The firm trained its employees to manage online stores and conduct online promotions and live selling. It also set up distribution hubs and delivery channels, making its products widely available and accessible to more customers. Nowadays, their clients are not just individual consumers but also organizations, pharmacies, and drug stores that buy in bulk. The firm’s success in staying afloat proved that the production and selling concept remains useful when integrated with contemporary and digital forms of marketing. Online selling keeps Filipino health-product maker afloat Erica Torres, “Online selling keeps Filipino health-product maker afloat,” Business Mirror (August 3, 2021), https://businessmirror.com.ph/2021/08/03/online-selling-keeps-f ilipino-health-product-maker-afloat/, last accessed January 13, 2022. 1.3. Traditional Approaches in Marketing 10 Unit 1: Marketing Principles and Strategies Keep in Mind Traditional marketing approaches are product-based and product-focused. Traditional marketing concepts lead companies to focus on product improvement, production and distribution efficiency, and promotional efforts. The traditional concepts in marketing include: ○ the production concept, which assumes that consumers choose widely-available and affordable products; ○ the product concept, which holds that consumers prefer high-quality products with innovative features; and ○ the selling concept, which states that consumers are more inclined to buy the intensely promoted products. Although the application of these marketing concepts has driven many businesses towards success, companies have changed their approach towards the marketplace. Nowadays, marketing strategies apply contemporary approaches which focus more on the customer and their needs. 1.3. Traditional Approaches in Marketing 11 Unit 1: Marketing Principles and Strategies Lesson 1.4 Contemporary Approaches in Marketing Contents Introduction 1 Learning Objectives 2 Quick Look 2 Learn the Basics 3 Contemporary Approach in Marketing 4 The Marketing Concept 5 Types of Contemporary Marketing 7 Special Topic: Digital Marketing 9 How Digital Marketing Affects Us 9 Common Digital Marketing Channels 9 Case Study 11 Keep in Mind 12 Try This 13 Practice Your Skills 15 Challenge Yourself 16 Photo Credit 17 Bibliography 17 Unit 1: Marketing Principles and Strategies Lesson 1.4 Contemporary Approaches in Marketing Introduction Have you seen an old advertisement released by business enterprises two to three decades ago? Do you see any similarities and differences compared to how businesses today communicate the value of their products? You live in a world where things constantly change. Old ideas, concepts, and processes are regularly evaluated to improve the way things are done. Marketing is among these things that have greatly evolved through time. In the previous lesson, you learned about the characteristics and relevance of traditional marketing. You also learned that enterprises focus on the product traditionally. This lesson will discuss contemporary marketing approaches and how they have changed how marketers, brands, and companies communicate with their customers. 1.4. Contemporary Approaches in Marketing 1 Unit 1: Marketing Principles and Strategies Learning Objectives DepEd Competency Identify and explain contemporary At the end of this lesson, you should be able to marketing approaches do the following: (ABM_PM11-Ia-b-4) Define the contemporary approach to marketing. Determine the appropriate type of contemporary approach in a given scenario. Explain the importance of the contemporary approach in marketing. Quick Look Knowing Your Customers A company plans to launch a new phone before the school year starts. The company targets high school students as the product’s primary market. The marketing team brainstormed how to highlight the new phone's features. Thus, they surveyed high school students using an online poll on social media platforms and email. They found out that most students answered through social media rather than emails. They also discovered that the students were more interested in the camera and editing features than standard text messaging. As technology advances, marketing the products have also changed. Businesses now focus on understanding consumer behavior in purchasing products through market research. Reaching out and getting feedback from the target market has also come a long way, thanks to new technological tools that help better understand customer needs. 1.4. Contemporary Approaches in Marketing 2 Unit 1: Marketing Principles and Strategies Questions to Ponder 1. What was the company's objective when they surveyed high school students? ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ 2. What does the survey result say about the lifestyle of the company’s target market? ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ 3. What do you think is the survey's implication to the promotion of the product? ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ Learn the Basics Look at the billboards, magazines, and print advertisements around you; do they capture your attention? Do you think these advertisements are effective in communicating the value of the product? How about those you see in your social media dashboard? Consumer preferences and behavior are constantly changing as products take several advancements over time. Marketers are challenged to keep up and adapt how they promote their products. Over the past years, cellphones and laptops have evolved fast, and consumers spend more time using them. Thus, companies ensure that their products are easily accessed and shopped with just a tap away from our mobile devices. You have learned in the previous lesson that the goal of traditional marketing was to make an immediate profit by selling the products and services offered. However, this perspective had shifted as consumers' purchasing behavior changed through the years. People are paying more attention to digital ads than television and radio ads. 1.4. Contemporary Approaches in Marketing 3 Unit 1: Marketing Principles and Strategies As a consequence, a fundamental shift has also occurred in how companies approach the market. From the outright aim of selling the product and making a profit, companies have now moved to offer experience (Chamat, 2021). Marketing is no longer about promoting the product’s functionality, and it has become a constant communication process with the consumers. Essential Question How do contemporary approaches impact the marketing strategies of businesses today? Contemporary Approach in Marketing The traditional approach to marketing is product-based. The concepts associated with this approach leads companies to focus on product improvement, production and distribution efficiency, and promotional efforts. Thus, a company that uses the traditional approach sells what it can make and looks for the right customers for its product. The traditional approach yielded the conventional forms of marketing, consisting of promotional strategies that reach an offline audience, such as radio, TV, and print advertising (Lucid Advertising, 2020). This type of marketing is not necessarily outdated because it is still helpful depending on the company's objectives and the kind of audience they target. However, traditional marketing approaches and forms are deemed profit-centered. Today, the marketing approach has shifted from product-based to customer-focused. Hence, contemporary approaches in marketing refer to theories and concepts that stress the importance of customer orientation versus the traditional market orientation (Williamson, 2021). Table 1 shows the key differences between traditional and contemporary approaches in marketing. 1.4. Contemporary Approaches in Marketing 4 Unit 1: Marketing Principles and Strategies Table 1. The difference between traditional and contemporary marketing. Traditional Contemporary Focus services, features, benefits consumer experience (product) (customer) Scope has narrow a definition that has a broader definition includes service categories and which includes consumption socio-cultural context Consumer Model logical decisions logical and emotional decisions The Marketing Concept The marketing concept defines the contemporary approach in marketing. The marketing concept seeks to find the right product for customers. Thus, it leads companies to exert all their efforts towards satisfying their customers, in exchange for profit (Perreault, Cannon, and McCarthy 2017). According to Theodore Levitt, the main idea of the marketing concept is to satisfy the customers through the product and the product experience, or the package of all things associated with creating, delivering, and consuming the said product or service (Kotler, et. al. 2018). The marketing concept did not just change the way products are made or promoted; it also changed the way organizations operate. Companies who have accepted the marketing concept make the whole company work together to satisfy the customers’ needs. The Marketing Department is not the only unit of a business that focuses on meeting the needs and demands of customers, but every department is involved too. For these companies, establishing customer relationships generates profit and success. Other organizations establish a more long-term goal of success, i.e., the triple bottom line. The triple bottom line refers to the measure of economic, social, and environmental outcomes. Businesses who aim to achieve this actively seek economic profit while taking 1.4. Contemporary Approaches in Marketing 5 Unit 1: Marketing Principles and Strategies care of their people, the community, and the environment. Figure 1. Some companies go beyond profit and aim for the triple bottom line. Although the marketing concept is largely popular among business organizations, many enterprises still apply traditional approaches. Firms with limited competitors tend to stick with the traditional product-focused approaches since customers have no choice but to accept the products and services they offer. But once an industry becomes competitive, customers prefer companies who are better at satisfying their needs and demands. Closer Look From Traditional to Contemporary: A Courier Company’s Story A courier company started in 1945. During its early years, it was a courier for delivering packages, documents, parcels in different locations in the Philippines. At first, advertisements were TV commercials and print ads where they conveyed a message of an ease-free delivery system for the customers. Customers physically go to the branch to pay for the service of delivering their package to their loved ones in the provinces. 1.4. Contemporary Approaches in Marketing 6 Unit 1: Marketing Principles and Strategies Through the years, the company continued the same service, but they built more channels for advertising. They now have an online website where customers can conveniently send and track packages. To date, the courier company also offers pick-up services directly to people's homes, so customers do not need to leave their homes to send packages. Check Your Progress In your own words, differentiate the contemporary approach from the traditional approach in marketing. _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ Types of Contemporary Marketing Contemporary approaches in marketing gave way to new forms of marketing. Companies are now using various channels to connect more to their market. These modern forms of marketing are significantly different from traditional ads in offline media and billboards. Some new forms of marketing are the following: 1. Non-profit marketing uses tactics and strategies to amplify an organization's cause and mission, solicit donations, and attract volunteers and supporters (Decker, 2021). It is for non-profit organizations like homes for the aged, children's orphanages, and helping humanity. These organizations do not see sales as an end goal but to increase awareness for funding on the given non-profitable causes. 2. Celebrity marketing uses celebrities or famous people to influence consumers to feel aspirational about a particular product. If an actress uses a skincare brand in an online video, the brand wants to convey a message related to the product and the actress. Given the number of followers celebrities have, this can help brands push for their products or services in the market. 1.4. Contemporary Approaches in Marketing 7 Unit 1: Marketing Principles and Strategies 3. Place marketing's purpose is to attract tourists and locals alike. Although this type of marketing has existed for a while, this modern approach is changing. It can be observed in several ways. You may see hotels promoting their business on social media or search engines and customers can book and pay for their accommodation. Several websites link their articles to other sites where people can view details of different places or book a reservation. Or, when you place a search query like, ‘café near me’, the search result will list several nearby locations for people to check out. 4. Cause marketing aligns a brand with a cause to produce profitable and societal benefits for both parties. For example, a yoga studio can advocate for body positivity in its marketing efforts. Or, a business that sells metal straws can advocate for the environment. When companies tie up their brand to something socially impactful, it can become more relevant and relatable to its audience. 5. Event marketing is a strategy that includes live and/or virtual events where audiences interact with a product or service. It can be done in-person or online via polls, chat boxes, and other social networking sites. These events can range from product demos, live Q and A's, webinars, concerts, etc. It is one of the most engaging marketing practices since it gives the audience an experience of the actual products. 6. Green marketing is advertising products or services based on their environmental benefits. These concepts may be environment-friendly on their own, or they may have been produced in an ecofriendly way. Putting labels in packaging can be a sign of green marketing. You may find instances where a product is labeled 'organic,' 'cruelty-free,' or 'ethically sourced.' Check Your Progress In your opinion, what kinds of products or services should be practicing contemporary marketing approaches? _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ 1.4. Contemporary Approaches in Marketing 8 Unit 1: Marketing Principles and Strategies Special Topic: Digital Marketing With the existence of the internet, there is one type of marketing relevant for marketers today— digital marketing. It is advertising through search engines, websites, social media, email, and mobile apps (Marketo, 2021). Once said to be offline, advertisements have now transitioned online. Even contemporary marketing approaches are present in online platforms. Likewise, there is still consumer targeting1 and segmentation2 in the digital world. How Digital Marketing Affects Us Digital marketing is unique because we can do it simultaneously with other advertising channels. With the eminent digital age coupled with the new normal, businesses are now turning online to keep themselves afloat. It also challenges marketers since new digital channels and devices are invented faster. Think about how a green marketing approach is launched by a coffee brand using sustainable packaging for its coffee cups. The coffee brand can launch this initiative by emailing its customer directory list, targeting more consumers through social media ads, and printing a QR code with a promo on the cup when the customer walks to the shop and buys coffee. Imagine the customer gets exposed to all of these brand touchpoints3. As digital citizens, our preferences are influenced by technology. Different companies are taking advantage of this situation to show off their brand, and customers are exposed repeatedly to it through various digital channels4. It will create a seamless avenue for brands to connect and market to audiences. So what are these different digital channels? Below is a list of the following. Common Digital Marketing Channels 1. Paid and unpaid SEO. According to Search Engine Journal, SEO or Search Engine Optimization is the process of optimizing5 a site and its content to establish higher visibility in search engine results (Maryville, 2021). It is an essential tool because 1 Target market - (noun) This is a particular group of consumers on which a product or service is focused on. 2 Market segmentation - (noun) This is dividing your target market into groups that share the same characteristics. 3 Brand touchpoints - (noun) These are any interactions and exposures that a consumer can have with a brand. 4 Omnichannel marketing strategy - (noun) This is an approach that creates a seamless experience for the consumer across different channels, platforms, and devices. 5 Website optimization - (noun) This is the process of improving the quality and quantity of website tra c on websites or web pages. 1.4. Contemporary Approaches in Marketing 9 Unit 1: Marketing Principles and Strategies people search for anything through search engines. Although optimization is relatively free, some companies invest more by doing paid SEO or pay-per-click marketing. In this strategy, several businesses are bidding to be at the top of search results so audiences can easily come across their ads and eventually buy their products or services. 2. Social media marketing. It is the use of different social media platforms to market products or services. According to Smart Insights, about 3.8 billion people used social media in 2020 — a 9% increase from 2019. Given its sheer audience growth, social media marketing has become one of the fastest-growing types of digital marketing (Maryville, 2021). In recent years, companies have made sure to make the user experience smoother. It is evident when people can easily access products and services through product or brand tags embedded in images or clickable buttons and links in videos. 3. Content marketing. It comprises visual and written communication (e.g., blog posts, memes, and videos) to promote a business, brand, or product (Maryville, 2021). Content should inspire, inform, and incite reactions to raise engagement and awareness towards a business' brand. It encompasses all digital marketing practices since all marketing approaches require valuable and compelling content to attract audiences. 4. Email marketing. It is a form of marketing that can make the customers on a business' email list aware of new products, discounts, and other services. It can also be a way to send any updates and exclusive promos to them. If customers couldn't see your ads on social media or search engines, they can still find them in their emails. A person can be part of the business' email list if they ever sign up on a company’s website. However, people can opt to unsubscribe from the company's email campaigns. 5. Mobile marketing. It pertains to any advertising activity promoting products and services via mobile devices, such as tablets and smartphones. It isn't limited to text brigades, but it can also include notifications that you receive after downloading an app. It takes a more direct approach since it notifies a customer of any updates or other valuable information without the customer opening their browser. For both online and offline marketing, it is essential to measure the effectiveness of a marketing campaign. To do this, marketers use marketing analytics — the practice of 1.4. Contemporary Approaches in Marketing 10 Unit 1: Marketing Principles and Strategies managing and studying metrics data to determine the return of investment6 of different marketing efforts like calls-to-action (CTAs)7, blog posts, and channel performance8 to identify opportunities for improvement. Nowadays, analytics tools help marketers gather information about how a campaign is performing. Since these tools can provide a lot of information, marketers need to narrow the scope. Therefore, they need to identify the key performance indicators9 (KPIs) for all set objectives before analyzing the success of every marketing campaign. Check Your Progress Do you think contemporary marketing approaches are key to the transition to the modern world? _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ Case Study #VogueEmpower Vogue India launched a social awareness initiative on its seventh anniversary. They created a two-minute short film collaborating with Deepika Padukone and other celebrities showcasing women voicing equality. The hashtags used for its social media marketing campaign, #MyChoice and #VogueEmpower, raised awareness on social media, especially to women. The message conveyed that empowerment starts within them. 6 Return on Investment - (noun) It is a way of measuring the return of investment from the amount spent by marketing for its efforts on the product or service. 7 Calls-to-action (CTA) - (noun) It is a marketing term for any design to tell the user to take some specified action. 8 Social media analytics - (noun) It is the tool that analyzes data from social media platforms. 9 Key Performance Indicators (KPIs) - (noun) This type of performance measurement that demonstrates how effectively a company achieves its business objectives. 1.4. Contemporary Approaches in Marketing 11 Unit 1: Marketing Principles and Strategies The magazine also used social media platforms by installing a live feed featuring the posts of everyone using the said hashtags. Women enjoyed sharing their posts and reading others' answers as well. The engagement has dramatically increased for Vogue India and effectively brought people aware of the said social awareness initiative. #VogueEmpower #MyChoice Zubair, “#VogueEmpower #MyChoice,” Whizsky (Whizsky, April 1 2015), https://www.whizsky.com/2015/04/vogueempower-mychoice/ , last accessed on November 15, 2021. Keep in Mind Contemporary approaches in marketing refer to theories and concepts that stress the importance of customer orientation versus the traditional market orientation. There are different types of contemporary marketing: non-profit marketing, celebrity marketing, place marketing, cause marketing, event marketing, and green marketing. ○ Non-profit marketing uses tactics and strategies to amplify an organization's cause and mission, solicit donations, and attract volunteers and supporters. ○ Celebrity marketing uses celebrities or famous people to influence consumers to feel aspirational about a particular product. ○ Place marketing's purpose is to attract tourists. ○ Cause marketing is aligning a brand with a cause to produce profitable and societal benefits for both parties. ○ Event marketing is a strategy that includes live and virtual events where audiences interact with a product or brand. ○ Green marketing is advertising products or services based on their environmental benefits. 1.4. Contemporary Approaches in Marketing 12 Unit 1: Marketing Principles and Strategies With the eminent digital age coupled with the “new normal,” businesses are now turning online to keep themselves afloat. It also challenges marketers since new digital channels and devices are invented faster. Brands and companies are using the power of digital (and of different touchpoints) to attract customers to use their products or services. Try This A. True or False. Write true if the statement is correct. Otherwise, write false. ________________ 1. Contemporary marketing approaches dive deeper into creating memorable experiences for consumers. ________________ 2. An example of cause marketing is through supporting against wearing disposable masks on social media. ________________ 3. Traditional marketing approaches are obsolete due to the presence of online platforms. ________________ 4. Using SEO is the best digital marketing strategy because consumers can search for their desired content online. 1.4. Contemporary Approaches in Marketing 13 Unit 2: Customer Relationship: Customer Service Lesson 2.2 Customer Value Contents Introduction 1 Learning Objectives 2 Quick Look 2 Learn the Basics 4 What is Customer Value? 4 Factors Affecting Customer Value 5 Customer Service 6 Product Quality 7 Brand Image 8 Price 8 Delivering Customer Value 10 Understand Customer Value 10 Stand Out with Your Proposition 10 Identify the Target Market 11 Determine the Correct Price 11 Invest in Your Customers 11 Importance of Customer Value 12 Case Study 13 Keep in Mind 14 Try This 16 Practice Your Skills 17 Challenge Yourself 19 Photo Credit 21 Bibliography 21 Unit 2: Customer Relationship: Customer Service Lesson 2.2 Customer Value Introduction What is the most significant factor that influences your purchasing decisions as a consumer? Have you tried recommending products or services to your friends or relatives? What made you do so? Some customers are pleased to buy a product of average quality for a low price, while others are willing to spend more for better quality and experience. Customers have different needs, wants, and preferences; what is common among them is that they pay for products or services to receive an expected value or benefits in return. 2.2. Customer Value 1 Unit 2: Customer Relationship: Customer Service In creating customer relationships, it is important to make sure that customers are happy and satisfied with the company's product or service. In this lesson, you will learn the concept of customer value and the factors that affect customer satisfaction. This lesson will provide you with a general understanding of how to handle customers and build long-term relationships with them. Learning Objectives DepEd Competency Explain the value of customers At the end of this lesson, you should be able to (ABM_PM11-Ic-d-6). do the following: Explain the concept of customer value. Determine the factors that affect customer value in a given scenario. Illustrate the importance of customer value to companies. Adapt business strategies in delivering customer value. Quick Look Piece of Cake A customer is only willing to pay if they can get the most value from a market offer. Customer value is the perception of what a product or service is worth versus the possible alternatives (Mahajan 2020). But what does this statement mean exactly? How can a business give value to customers? Consider a cake store that sells pineapple pastry. The price per slice is ₱125. The actual product is a cake with cream in the middle and pineapple pieces on top. However, customers were not returning or giving positive feedback about their pineapple cake experience. With this information, we can assume that the consumers may not be receiving the best value for their purchases. 2.2. Customer Value 2 Unit 2: Customer Relationship: Customer Service The shop may consider the following options to improve the delivery of customer value: 1. They can sell the product at a lower price. 2. They can add more quality to the product and customer experience. For instance, the bakery can mix pineapple bits in the cream and add more pineapple slices on the top. If any of the two options increased sales and customer visits, the customers might have sensed more value in the product. Questions to Ponder 1. Based on the text, what factors affect the customer’s purchasing decisions? ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ 2. Do you think all customers look for the same value in every product? Why or why not? ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ 3. If you are selling something, how will you create the best customer value? ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ 2.2. Customer Value 3 Unit 2: Customer Relationship: Customer Service Learn the Basics It is typical for buyers to raise the same question: “Is what I’m getting worth the money I gave up to get it?” When customers ask this question, they compare the benefit they gained against the cost of obtaining the product or service. In the previous lesson, you learned the concept of relationship marketing. You now know that retaining customers is as important as acquiring new ones. Thus, companies employ relationship strategies to give long-term value and satisfaction to customers. One of the ways for businesses to develop partnerships with customers is by improving their overall performance and discovering better ways to deliver customer value. Essential Question What are effective ways to deliver value to customers? What is Customer Value? There are several definitions of value. To some, value means costs, like when someone asks: "how much do I have to pay for the car?" To others, value implies benefits like, "what benefits will I get from buying this car?" You may have heard some people saying they got "value for money" or they give "money for value." Customers who want value for money intend to get the most and best value from the amount they spend. They are price-conscious. Meanwhile, customers who give money for value are value-centered. It means that they concentrate more on the benefits they get once they spend on a product. These statements beg the question: how do customers perceive value? Customer value determines the worth of a good or service compared to the competitors. Customer value is the perception of customers that they received fair value for the amount they paid. When the cost of a product is not worth the benefits, customers experience buyer's remorse. This feeling of regret and dissatisfaction could lead customers to look for a competitor company that offers a better deal for a comparable product or service. 2.2. Customer Value 4 Unit 2: Customer Relationship: Customer Service Understanding and measuring customer value helps businesses set a reasonable price and reduce conflicts in the customer experience. Closer Look Lunch Time! You are going for lunch, and you are deciding between Company A and Company B. Company A offers coupons and discounts, but company B sticks to its original pricing. Company B's products range from freshly grilled burgers and fries to rice meals, while Company A focuses mainly on sandwiches. Which, do you think, offers a better customer value? It depends. Individuals have different wants and needs. Therefore, no two customers will place the same value on the same product or service. It applies to similar products as well. Some customers are ready to pay a premium for a high-quality product or service, while others believe that the same benefits are not worth the price. Factors Affecting Customer Value Capturing customer value entails fulfilling the customer’s needs and wants. While this is true, you must understand that value comes from many things and is caused by different factors. Businesses need to build customer relationships and retention to gather the maximum customer value. Remember that customer value comes from the overall benefit the customer receives from a product or service against the cost to buy the said product or service. If benefits exceed the costs, there is a net positive value. Aside from the monetary value, customer value can also be derived through the customer's opinion on the product or service, the brand, and customer service. Figure 1 illustrates the factors that affect customer value. 2.2. Customer Value 5 Unit 2: Customer Relationship: Customer Service Figure 1. Businesses should consider several factors in customer value. Customer Service Customer service is the direct, one-on-one interaction between a customer making a purchase and a representative of the company selling it. Direct and constant communication between businesses and customers is essential to ensure repeat customers. The specific type of customer service depends on the market offering and the brand. What matters is that the customer will have an overall positive experience with the brand through customer service. When customers have a great experience, businesses gain customer value. To understand the different kinds of customer service, let's look at the services offered in a supermarket and a boutique. When you shop at a supermarket, observe that the grocery attendants have limited assistance for the customers. You usually do not expect them to help push your cart, but you can ask them when looking for a specific brand of product that you want. In most cases, they can also help you carry your grocery packages when they appear too heavy for you. Meanwhile, compared with a boutique store, the boutique clerk will offer assistance most of the time, and you expect them to suggest different clothes to mix and match depending on your style. These stores provide different customer experiences, but both are effective based on the market offering and selling products. 2.2. Customer Value 6 Unit 2: Customer Relationship: Customer Service Figure 2. Customers appreciate the product, as well as the helpful and friendly staff. Product Quality Product quality helps businesses in acquiring customers and gaining their loyalty. When a product's quality is known and trusted, customers will continually avail the products offered by the company. For example, a very satisfied customer from a pair of sports shoes would most likely buy another athletic gear from the same brand. Product quality is critical since it significantly affects business performance. By assuring product quality, businesses establish the reputation of their brands, acquire customers and retain them, which leads to increased revenue. Companies also save costs on product returns, troubleshooting, problems, and other losses when the quality of products is assured. Thus, businesses can lower their operating costs, improve investment returns, and grow revenue. Entrepreneurs and companies must pay attention to customer satisfaction to improve product quality. Customers' complaints and comments should be considered in developing products and services, allowing the business to stay ahead of the competition. 2.2. Customer Value 7 Unit 2: Customer Relationship: Customer Service Brand Image A brand image captures how customers view a company's exclusive personality. It incorporates the customers' exclusive relationship with the product, the firm, and the mix of associations formed due to these encounters. This perceived image is an unconscious evaluative assessment of a brand's relative strengths and weaknesses. The marketing materials, advertising activities, and the customers' experiences will shape and refine the brand image. Since the brand image is influenced by the public's unpredictable preferences and attitudes, it is fragile and prone to constant adjustment. Figure 3. Different food brands present themselves as healthy options with healthy experiences, which give them unique brand images. In a study on the influence of brand image on customer value, Sajtos, Kreis, and Brodie (2015) discovered that brand image and staff trust had a substantial impact on customer value and loyalty perceptions. The study demonstrated that changes in the intensity of advertising expenditure could explain differences in the relative effect of customer value and loyalty drivers across diverse service industries. Price The financial health of the firm is driven by price. The price of products affects how much revenue a business will get. It determines whether the company can cover the costs of creating and delivering its products. Thus, pricing strategy is one of the most significant aspects of marketing strategy. 2.2. Customer Value 8 Unit 2: Customer Relationship: Customer Service People are sensible in their buying decisions. It does not necessarily mean that they would always buy the cheapest product. Some people may become skeptical when the cost of a product is too low. Low quality is associated with low price. Therefore, some companies employ price-quality signaling wherein a higher selling price indicates that the products offer superior quality. In general, pricing techniques include the five options listed below. Cost-plus pricing is estimating the costs and applying a mark-up. Competitive pricing sets the price depending on how much the competitor is charging. Value-based pricing depends on how much the buyer feels your product is worth. Price skimming establishes a high price and decreases it when the market changes. Penetration pricing sets a low price to join a competitive market and later raise it. Pricing methods are two-edged swords. What draws some clients repels others. In marketing, indeed, you can not please everyone. However, keep in mind that you want the consumer to buy your goods, so you must employ an acceptable plan for your target market. Closer Look Safe and Budget Travel The brand image of an airline is associated with safe and budget travel for backpackers. Such an image is due to the type of destinations offered; low price, discounts, and promotions; ease in booking, rebooking, and refunds; comfortable take-offs and landings; games and fun activities on board, among others. This brand image may contrast with its main competitor, which specializes in business and luxury travel. Customer value is brought by a mix of product quality, customer service, price, and overall brand image. 2.2. Customer Value 9 Unit 2: Customer Relationship: Customer Service Check Your Progress How do the different factors contribute to customer value? _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ Delivering Customer Value Creating customer value is vital since it improves a business's brand reputation, profits, and long-term success. Providing high-quality goods and services and excellent customer service boosts clients' confidence and faith in the company. Customers who believe they made a good purchase are more inclined to buy again and tell others about their pleasant experience. Identifying the benefits that customers appreciate will help companies enhance their product performance, increase sales, and inspire customer loyalty. So how can a business deliver customer value? Understand Customer Value Businesses should interact with customers. They should ask them what they want and need and observe their behaviors and reactions. This way, companies can collect data and learn what experiences are essential to consumers. It could lead them to improve their market offering. It is worth noting that consumers' preferences differ. Aside from the actual value of the product, or the selling price, there is also perceived value. A customer's perceived value of a product depends on income, lifestyle, personal choices, etc. Stand Out with Your Proposition A value proposition is the brand's promise, particularly the mix of benefits or values that satisfies the customer's needs. It sets how the business will stand out, have advantages against competitors, and position itself in the market. 2.2. Customer Value 10 Unit 2: Customer Relationship: Customer Service Businesses will know their value proposition by answering the following questions: What value can I promise the customers if they purchase the products? Will the benefits customers receive outweigh the costs? Is my product offering unique from the rest of the competitors? Identify the Target Market As mentioned previously, customers perceive value differently. Thus, brands target people who will likely connect with the brand and purchase the product. There is no fixed process for segmenting the entire market. However, there is a process to determine a business's target market. The process of segmenting and targeting the market will be discussed in the following lesson. Determine the Correct Price Businesses set pricing that delivers customer value while maximizing their "take" or revenues. Satisfied customers who see a lot of value in a business's service or product are usually more inclined to pay more. In contrast, dissatisfied customers will leave even if the price is low. Although there are different pricing strategies, such as cost-plus pricing, competitive pricing, value-based pricing, price skimming, and penetration pricing, businesses can not simply choose one and implement it. To determine the selling price, the company should consider all factors, including the competitors' price, industry price, and customer's perceived value. Invest in Your Customers Once a business determines its target audience, its marketing efforts must focus on attracting that specific audience. Since different audiences have different needs, the company must allocate marketing efforts and resources according to those needs. It is also essential for businesses to invest in growth to improve their market offering. It helps them serve their current customers better, attract new customers, and maintain an advantage against the competition. 2.2. Customer Value 11 Unit 2: Customer Relationship: Customer Service Closer Look Sticking with Luxury A famous brand for luxury watches remains unfazed even though its competitors have moved towards producing and selling more affordable versions of their products. The said company maintained that its brand image is luxury, pride, and prestige. Its target audiences are the elite and the affluent, so people