Value Based MarketingValue Based Marketing Value Based MarketingValue Based Marketing

Compiled by

Bermand Hutagalung

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Marketing – 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.

Marketing management is the art and science of choosing target markets and building profitable relationships with them. Marketer must define :

– What customers will we serve?– How can we best serve these customers?

Marketing Definition Marketing Definition

What Can Be Marketed?

• Goods• Services• Places• Ideas• Events• Persons• Properties• Organizations• Information• Experiences• Social Political

What is being marketed in this ad?

Marketing: Creating Utility

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The ability of

goods and

services to

satisfy wants.

FormUtility

TimeUtility

PlaceUtility

Ownership Utility

Customer need more than utility, they need value added

Marketing Trend : from Production to Value Based Era

Production-oriented era

Sales-oriented era

Market-oriented era

Value-based marketing era

a set of processes for creating, communicating, and delivering value to customers, build strong customer relationships and for managing this relationships in ways that benefit the customers, the organization,

and its stakeholders.

What is Value Based Marketing ? What is Value Based Marketing ?

ValueBase

Define target marketsand understandcustomer value

Determinevalue

Proposition

Delivervalue

Monitorvalue

Map of Value Creation

Marketing and The Value Delivery Process Marketing and The Value Delivery Process

Rubbermaid Commercial Products, Inc.(example of value based vision & mission)

“Our vision is to be the Global Market ShareLeader in each of the markets we serve. We will earn this leadership position by providing to our distributor and end-user customers innovative, high-quality, cost-effective and environmentally responsible products. We will add value to these products by providing legendary customer service through our Uncompromising Commitment to Customer Satisfaction.”

WHAT’S SO SPECIAL ABOUT ?

The legendary customer service

The Progression of Economic Value

                             

                             

                             

                             

                             

                             

                             

                             

                             

                             

                             

                             

                             

                             

                             

COMPETITIVE POSITION

Differentiated

Undifferentiated

DISTINCTIVENESS

MemorableUnmemorable

Pine & Gilmore, “Welcome to the Experience Economy,” HBR, July/Aug 1998.

Extract

commodities

Make

goods

Deliver

Customer services

Stage

experiences

How much value does Starbucks add?

Cost of coffee bean when harvested =

$0.50/lb.

Value realized by Starbucks from selling cup of coffee =

$230/lb.

AN INCREASE IN VALUE

OF +46,000%

See video : How Starbucks create value through excelent customer services

The value chain is a tool for identifying was to create more customer value because every firm is a synthesis of

primary and support activities performed to design, produce, market, deliver, and

support its product.

The Importance of Value Chain

Customer value can be created through value chain

Porter’s Value Chain

Firm InfrastructureHuman Resource Management

Technology Development

Procurement

SupportActivities

Inbound Logistics

PrimaryActivities Operatio

ns

Outbound

Logistics

Marketing

and Sales

Service

Upstream value activities Downstream value activities

Value CreationStrategy at Wal-Mart

Provide value for our customersProvide value for our customers

Low prices, everydayLow prices, everyday

Low inventory levelsLow inventory levels

Linked communications between stores

Linked communications between stores

Short flow timesShort flow times

Fast transportation system

Fast transportation system

Cross-dockingCross-docking Focused locationsFocused locations

EDI/satellitesEDI/satellites

Wal-MartWal-Mart

MissionMission

Competitive Competitive StrategyStrategy

Operations Operations StrategyStrategy

Operations Operations StructureStructure

Enabling Process Enabling Process and Technologiesand Technologies

Marketing Focus Evolution : From Production to Customer Relationship

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Lastly Trend : From Value to Holistic Marketing

Holistic marketing sees itself as integrating the value exploration, value

creation, and value delivery activities with the purpose of building long-term, mutually

satisfying relationships and coprosperity among key stakeholders.

Sources : Philip Kotler, Marketing Management, Prentice Hall, 2009

The Marketer Strategic Task : Creating Holistic Marketing

3.Value delivery 3.Value delivery

1.Value exploration1.Value exploration(formulation)(formulation)

2.Value creation2.Value creation

Marketer - Marketer - Value Value Based StrategyBased Strategy

Created by Bermand

4. Customer 4. Customer RelationshipRelationship

Summary of Value Based Marketing

Thank You