Creating Value for Customers

Creating Value for Customers

Thinking of the concept of customer value took me down memory lane to my undergraduate days in the eastern part of Nigeria. I recall taking a taxi to New Haven Junction in the serene and beautiful city, Enugu. The location was known as the precinct of typist and shorthand writers. I urgently needed to type my final year project as the submission date was fast approaching. Most of the typists looked busy, so I approached a lady with a cropped hairstyle plaited with local thread and a shiny face obviously massaged with kernel oil. She nonchalantly informed me that it would cost 10kobo per page and showed me the pile of work on her table. I decided to wait for her, watching as she typed away on her mechanical Underwood Five typewriter. 

After six hours, she typed rather roughly, erasing the various mistakes with Tippex ink and bringing out a work that might have looked neater if handwritten.Today, the ‘sophisticated’ mechanical typewriter has almost gone into oblivion along with the careers of the hundreds who depended on it for a living without upgrading their skills. On the contrary, companies that understood the concept of ‘customer value’ have gone ahead to introduce the personal computer, and now, we have the latest invention,the I-Pad, a 700 gram tablet (miniature) computer developed by Apple, Inc. Probably, in years to come, our children will tell their unbelieving grandchildren that there was once a contraption called I-Pad. Hence,defining what customers need is a key success factor that should be a priority for any organization.

With this background, it is also important to take a look at how marketing has evolved over the years.  Shortly after the Second World War, the American Marketing Association came out with the following definition of marketing: “Marketing is the performance of business activities directed towards, and incident to, the flow of goods and services from the producer to consumer or user” (1948 AMA Definition of Marketing). This definition was a reflection of the times, concentrating on the flow of goods and services from the producer to the consumer.

In 1985, there was another definition inculcating the concept of the 4Ps of marketing,namelyProduct, Place, Price and Promotion. This was during the marketing era of 1950 to 1990 when there was a

focus on the needs/wants of the target markets and delivering satisfaction better than competitors.The 1985 AMA definition of marketing is as follows: “Marketing is the process of planning and executing the conception, pricing, promotion and distribution of goods, ideas and services to create exchanges that satisfy individual and organisational goals”

After 1990, the value era was ushered in with a shift by companies towards creating value for customers and delivering superior value. This time was called the ‘one-to-one era’. Emphasis was on relationship building and the paradigm shift from asellers’ market to abuyers’ market. There was also a new definition of marketing:

“Marketing is an organisational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organisation and its stakeholders”(2004 AMA Definition of Marketing).

While the 1985 definition was about planning and execution, 4Ps, exchanges and individual and organisational goals, the 2004 definition emphasised marketing as an organisational function (not an individual unit/department),a set of processes creating, communicating and deliveringvalue andrelationships and conferring benefits on theorganisations and stakeholders.

There was yet a new definition of marketing by the AMA in 2007:

Marketing is defined as “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners and society at large.”

The following are the four (value) activities observed from the above definition:

•   Creating: Process of collaborating with suppliers, customers and other stakeholders to create offerings (products & services) that have value.

•      Communicating:Describing the offerings (products & services) and the value therein to customers and obtaining necessary feedback

•     Delivering: Getting the offerings (products & services) to the consumer in a way that optimises value.

•          Exchanging: Trading value for the offerings (Raymond & Tanner, 2010).