CUSTOMER VALUE

Customer Value

Customer Value

Introduction

Today customers have evolved from the traditional frame of mind because they do not seek only the lowest price or quality of a product or service. Today, they seek out and reward; the organizations that deliver customers the value for their purchase or acquisition wins the a lasting relationship with them. Today, the vast majority of people are facing a wide variety of products and services aimed at meeting a particular need, either, offering the lowest price the market or the best quality (Arogyaswamy, Simmons, 1993). Relatively new marketing concept, the concept of customer value and life time value is to evaluate the potential purchase and development of tastes, interests and the risk presented by each client in the optical develop the performance of marketing actions (Arogyaswamy, Simmons, 1993).

The estimate of customer value is based on projected revenue realized from each customer or customer segment. Customer value helps to optimize investments by focusing solely on the advertiser's most profitable customers and / or develop the profitability of a customer participating in the growth rate of its equipment and food (Arogyaswamy, Simmons, 1993). This indication also has a predictive value in terms of risk: the customer value to estimate the risk of default, termination of subscription, transition to competition and deploy marketing campaigns accordingly. Real tool for decision support, customer value allows the advertiser to make the best strategic choice: to manage the attrition rate, optimize the targeting of marketing efforts by setting a target market, cost control measures marketing and increase efficiency.

Discussion and Analysis

Advantages and Disadvantages of Customer Value

One of the most prominent advantages of offering customer value is the increased brand loyalty. Nowadays competition is very intense, globalization has blurred the national boundaries which have enabled many organizations and multinationals to enter any market they want (Buttle, 2004). It is now crucial for the organizations to retain more customers as it can in order to survive in the market. Customer value can be provided by organization by offering value added services these services add more worth to their product. Customer value ultimately creates customer satisfaction and increases the brand loyalty towards organization. Nevertheless, this also allows organizations to attract the untapped market through the word of mouth of existing customers.

Customer value also brings certain disadvantages to the organizations. Because, in the process of adding more value to the product the organizations often increase their cost which ultimately has an impact on the profit margin of the organization (Buttle, 2004). In addition, it is believed that value provision is a never ending process because the customer will never stop asking for more. Hence, value creation process increases the expectations of customer even more which can be risky for an organization.

Product Functionality

Functionality of the product is what a product can do. After designing the product and prior to launch the product in the market it is thoroughly tested in order to ensure that the product functions as it was specified. One of the key questions when a company proposes ...