Adding Value
A main goal of marketing is to add value to an organization. Marketing also aims to present the value an organization's products can add to a consumer's life. It is able to accomplish this via the following avenues:
- It is the link between a society's material requirements and its economic patterns of response.
- It satisfies needs and wants through exchange processes and building long-term relationships.
- It is the process of communicating the value of a product or service through positioning to customers.
- It is an organizational function and a set of processes for creating, delivering, and communicating value to customers. It also manages customer relationships in ways that benefit the organization and its shareholders.
- It is the science of choosing target markets through market analysis and market segmentation, as well as understanding consumer buying behavior and providing superior customer value.
Marketing Methods Used to Deliver Value
For marketers to deliver value to a firm's customers, and also add value to the firm itself, they must consider what is known as the "total market offering. " This includes the reputation of the organization, staff representation, product benefits, and technological characteristics as compared to the market offerings and prices of competitors. Value, in this sense, can be defined as the relationship of a firm's market offerings to those of its competitors.
Value in marketing can be defined by both qualitative and quantitative measures. On the qualitative side, value is the perceived gain composed of an individual's emotional, mental, and physical condition plus various social, economic, cultural, and environmental factors. On the quantitative side, value is the actual gain measured in terms of financial numbers, percentages, and dollars.
One way for an organization to increase its perceived value added is to improve its quality/price ratio. When an organization delivers high quality but at a high price, the perceived value may be low. When it delivers high quality at a low price, the perceived value may be high. The key to delivering high perceived value is for a firm to make consumers believe that its products will help them solve a problem, offer a solution, produce results, and make them happy.
Marketing provides a creative energy exchange between people and organizations in our marketplace. Since value changes based on time, place, and people in relation to changing environmental factors, marketing adapts to consumers changing perceptions and beliefs in order to have optimal value creation.
Customer Value Analysis
To reveal the company's strengths and weaknesses compared to other competitors, it is important to conduct a customer value analysis. This is the collection and evaluation of data associated with customer needs and market trends. The steps are as follows:
- Identify the major attributes and benefits, such as ease of use or improved social standing, that customers value for choosing a product. It is important to identify and define benefits as opposed to features.
- Assess the quantitative importance of the different attributes and benefits. In other words, attempt to assign an actual price differentiation for products with value-adding benefits.
- Assess the company's and competitors' performance on each attribute and benefit. It is important to be honest with yourself about who your actual closest competitors are and how they price their products.
- Examine how customers in the particular segment rated the company against major competitors on each attribute.
- Monitor customer perceived value over time.
Value Proposition
Conducting an effective customer value analysis can lead a company to creating an accurate value proposition. A value proposition is a promise of value to be delivered and a belief from the customer that value will be experienced. A value proposition can apply to an entire organization, or parts thereof, or customer accounts, or products or services.
Developing a value proposition is based on a review and analysis of the benefits, costs and value that an organization can deliver to its customers, prospective customers, and other constituent groups within and outside the organization. Organizations can use value propositions to position value to a range of constituents such as:
- Customers: to explain why a customer should buy from a supplier.
- Partners: to persuade them to forge a strategic alliance or joint venture.
- Employees: to "sell" the company when recruiting new people, or for retaining and motivating existing employees.
- Suppliers: to explain why a supplier should want to be a supplier to an organization or customer.
Louis Vuitton Store on Champs-Elysees in France
Louis Vuitton's marketing team communicates value to consumers by utilizing a high price point, allowing celebrity clients to carry exclusive versions of its bags, and by creating elaborate magazine spreads in fashion magazines.