11

2
Accountancy Business and
Management (ABM)
PRINCIPLES OF MARKETING
Quarter 3 – Week 4 Module
Relationship Marketing and
Customer Value – Part 2

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ABM 11 – PRINCIPLES OF MARKETING
Alternative Delivery Mode
Quarter 3 – Week 4 Module: Relationship Marketing and Customer Value – Part 2
First Edition, 2020

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 What I Need to Know
This module was designed and written with you in mind. It is here to help you
master the Relationship Marketing and Customer Value. The scope of this module
permits it to be used in many different learning situations. The language used recognizes
the diverse vocabulary level of students. The lessons are arranged to follow the standard
sequence of the course. But the order in which you read them can be changed to
correspond with the textbook you are now using.

Content Standard
The value of customer relations and customer service.

Performance Standard
Develop a program for customer service.

Most Essential Learning Competencies

Define “relationship marketing,” and explain the value of customers.

After going through this module, students are expected to:

1. Appreciate the importance of customer value
2. Gain mastery in cultivating customer value
3. Differentiate customer satisfaction and customer value

What I Know
Activity 1.
Before you proceed, let us try to test what you know about the lesson.
Direction: Write TRUE if the statement is correct and FALSE if wrong.
1. Values are what someone or a firm stands for: Honesty, morals, ethics,
sustainability, integrity, trust.

2. Creating customer value increases customer satisfaction and the customer

experience.

3. Without providing true customer value, firms will be able to attract and retain
customers.

4. When considering customer value, it is important to understand that it is much more

than simply a price/quantity view.

5. Customers compare their perceived value of different products when making a

decision.

6. Satisfied customers that perceive a lot of value in your offering are not only willing
to pay more, they’re willing to talk you up.

7. Value could vary based on season, geography, demographics or certain product

attributes.

8. Customer satisfaction and value are both fundamental concepts in the

understanding of marketing.

9. Customer Value is the level of satisfaction of your customer towards your business.

10. Value changes during the use of a product or during the customer journey.

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 Lesson
Relationship Marketing and
4 Customer Value

What’s In
Activity 2.
Customer satisfaction and value are both fundamental concepts in the
understanding of marketing. It is important to note that while they are highly
interrelated, they also operate independently.

Customer
Customer Value VS Satisfaction

Essentially, value Customer

is when a satisfaction, on the
consumer other hand, occurs
perceives that they after the consumer
will get a good deal has become a
from the company, customer. It is the
brand, product or customer's
service. The assessment of how
consumer will see well that value was
value when the delivered – that is,
benefits they did they get the
expect to receive value that they
exceed the expected to
expected costs and receive?
effort involved in
acquiring the
product.

Therefore, the difference between customer satisfaction and value is that one is
a pre-purchase assessment and the other is a post purchase assessment. If the
delivered value equals or exceeds the expected value, then they will be satisfied and
become repeat customers.

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 What’s New
Activity 3.
1.5 ml VS 500 ml
The following If we take
illustration is taken from the view that
marketingstudyguide.com value is
on customer value where simply how
the example of two bottles much you get
of Coca-Cola. for what you
pay, this
situation
One being a large family size makes no
and the other being an sense at all. It
individual serving size. In only makes
supermarkets, in sense when
particular, the family size you think
bottle sits on the shelves at about the
room temperature, whereas range of
the smaller size is in a benefits that
refrigerator near the the consumer
checkout. In many will receive
supermarkets, the smaller from a
bottle is equal in price and particular
sometimes greater in price purchase.
than the larger bottle.

I
n this case, what do you think are the benefits of purchasing a 500 ml vs 1.5 liter
of Coca Cola?

What Is It

Value has many different meanings. To some value means price (what is the value
of this car?) to others it means benefit (the value I got from this car). It also means the
worth of something. That is why you hear some people saying “value for money”
(meaning they are price sensitive); and others who prefer “money for value” (meaning
they are willing to pay for what they consider as benefits, as from a brand or a better
product, or more convenience etc.)

The dictionary meaning includes: The regard that something is held to deserve;
the importance, worth, or usefulness of something. Synonyms are: merit, worth,
usefulness, use, utility, practicality, advantage, desirability, benefit, gain, profit, good,
service, help, helpfulness, assistance, effectiveness, efficacy, avail, importance,
significance, point, sense. But when it comes to marketing concepts, what exactly does
customer value mean?

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 Understanding Customer Value

Virtually all organizations strive to deliver good overall value for both their current
and potential customers' value. Without providing true customer value firms will be
unable to attract and retain customers. And without customers there is no functioning
business in the long-term. Customers need to perceive that value exists for them – that
is, they will receive more benefits than the costs they incur.
Therefore, in simple terms, customer value is when a customer perceives that the range
of benefits they receive from a transaction exceeds the cost and effort undertaken to
participate in that transaction. In other words, did they get a good deal and did they
benefit overall from the purchase?

Customer value can be simplified into this basic formula:

Customer value = all benefits received less purchase costs and time and effort

It can’t be so linear as to focus only on price because customers spend a lot more
than just their cash when investing in products or services. You have to consider what
they pay in time, effort, convenience, energy and so forth.

To the customer, the benefits can also vary which can shift the value. Value for
one customer may not be the same as another. What’s important to one may not be
important to another segment of your audience.

Don’t Compete on Price

If you try to compete on price alone with your competitors, you’ll often lose. Cost
is certainly a factor for customers, but many people are willing to pay more when they
can see the value and feel like they’re getting their money’s worth. Satisfied customers
that perceive a lot of value in your offering are not only willing to pay more, they’re
willing to talk you up.

Conversely, an unsatisfied customer who hasn’t seen the value is going to go

somewhere else, even if you offer the lowest price.
Set a price that makes it clear that customers are receiving value, but it also maximizes
your take. Somewhere in the middle, but not the lowest, communicates value at a fair
price to customers who are comparison-shopping.

How to Cultivate More Customer Value

This is far easier than you can imagine. Your customers already know what
interests them. They already have subconscious and conscious drivers. They already
know the problems they have, and may even know the solutions they need.

You just need to understand what drives value for your customers. Good
customer research, including surveys and talking to your customers, can unearth what
matters most to them.

Refine Your Value Proposition

Consider all the businesses out there offering exactly what you offer. With similar
products, customers have no choice but to make a subjective choice. Your value
proposition is where you win them over. You need to communicate what makes you
different, and continually work to increase that value proposition to set yourself apart.
You can do that through:

1. Identifying what you’re good at and owning it

2. Make your value proposition clear in all your communications
3. Ask customers why they buy from you, use feedback to boost your value
proposition
4. Quantify your value with real data
5. Communicate the benefits of your service so customers can see the value

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Segment Your Audience
Different customers have different ideas of
value, and what is important to them. Rather than
trying to shoehorn the same value proposition to your
entire audience, identify what makes different
segments tick.

Value could vary based on season, geography,

demographics or certain product attributes. Segment
your audience based on what they value, and adjust
your message to each. What an adult considers as
value, for example, can be completely different than
that of a teenager.

If you have a target market cut out for you,

then all you have to do is get in the shoes of your
customer and figure out what’s a gesture they would
appreciate.

What’s More

Customer Value is a primary part of marketing.

Customer value means the value which the
customer gives after taking service or after
purchasing a product from a vendor.

Customer value is important as it helps in

creating a brand image and also helps in
promoting the brand for the better result.
Customer loyalty helps in creating a trust of the
brand towards its customers and there is little
chance of shifting customer’s taste to another
brand. The more customers are loyal towards a
brand, the more positive views a brand gets.

What Have I Learned

Activity 4.
In creating value, first you have to understand the customer value concept, what
a customer perceives as value, and how a customer’s value needs change over time, and
how to get customer feedback. You must realize that people buy a product or service
that creates the most value over competing options.

To create real value, you must recognize what a customer perceives as value. You
must understand how the customer views your competition’s product. What is
important to the customer in his buying decision? Is price more important or are
benefits? Are you good at delivering what the customer believes is important? Are you
able to deliver more than your competition on these factors?

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 What I Can Do

Activity 5.

The Customer Value Delivery Cycle

1. Think of everything you do in

terms of delivering value to
your customers and
audience with the
understanding that they
have choices and you are not
the only choice.

2. Understand your market well

enough that you can break it
down into individual
segments with unifying
characteristics that will
respond in the same way to a
given value proposition.

Assessment

Activity 6.
MULTIPLE CHOICE: Read the statement carefully and choose the correct answer:
1. The following statements are true of customer value EXCEPT:
a. Customer Value is the level of satisfaction of your customer towards your
business.
b. It refers to the entire set of activities, which communicate the product,
brand or service to the user.
c. Customer value is a fundamental concept in the study of marketing.
d. Customer Value is the perception of what a product or service is worth to a
Customer versus the possible alternatives

2. The following are some of the benefits a customer value EXCEPT:

a. Quality of the product
b. Company brand and affiliation
c. Advantages of ownership
d. Failure from use of the product

3. In creating customer value, a company should take note of the following:

a. Create a real Unique Value Proposition
b. Create a real Unique Value Proposition
c. Provide stellar customer service
d. All of the above

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4. Your value proposition is where you can win your customers. You need to
communicate and set yourself apart through:
a. Ask customers why they buy from you, use feedback to boost your value
proposition.
b. Make your value proposition clear in all your communications.
c. Identify what you’re weak at and own it.
d. Communicate the benefits of your service so customers can see the
value.

5. The following are example of customer satisfaction EXCEPT:

a. Customer turn out to be your referrals
b. Customer complained more
c. Customer frequently leave positive feedbacks
d. They keep coming to you for more

6. The following are the cycle of customer value delivery EXCEPT:

a. Discover the opportunities
b. Communicate the value
c. Create an irrelevant market offering
d. Deliver the value

7. The following statements are true of customer value delivery EXCEPT:

a. Always look for the opportunity to create new value propositions.
b. Look for avenues to communicate this value at the right time and in the
right place.
c. Make your value proposition complex in all your communications
d. Listen to your customers.

8. Which of the statement in creating real value is FALSE?

a. Giving a price that makes the Customer believe he is getting more than he
pays for the benefits he gets versus competitive offers.
b. Making it convenient for the Customer to buy, and how he wants to buy
and pay.
c. Increasing the price, and not giving something extra over competition.
d. For dealers, the feeling the company will grow and offer new products for
the dealers to sell.

9. The following are example in how you make your customers feel valued EXCEPT:
a. Smiling at and being attentive to a Customer creates value for him
b. Not making you repeat questions or answers and keep relating the
problem.
c. Making it difficult for the customer to contact the company.
d. Receiving a call from a service person confirming his/her visit

10. Which of the following are true of customer satisfaction?

I. The consumer will see value when the benefits they expect to receive exceed
the expected costs in acquiring the product.
II. Customer want to know when they approach you and your business, they’ll be
able to get what they want as fast as they can
III. Customer satisfaction and value are both fundamental concepts in the
understanding of marketing.
IV. Value is when a consumer perceives that they will get a good deal from the
company, brand, product or service.

a. I, IV, II
b. I, II, III
c. IV, I, III
d. All of the above

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 Additional Activities
Take the time to research and understand your market well enough that you can
break it down into segments, looking deep into each audience segment to understand
their most pressing needs and what they find valuable.

References

/Amit. (n.d.). Customer value: what it means and how to create it.
https://tallyfy.com/customer-value/

Fripp, G. (n.d.) Customer value. https://www.marketingstudyguide.com/customer-

value/

Lapaas. (2020). How to calculate customer value, satisfaction and loyalty.

https://lapaas.com/customer-value-satisfaction-loyalty/

Mahajan, M. (2016). What is Customer Value and How Can You Create It?
https://customerthink.com/what-is-customer-value-and-how-can-you-create-
it/

Mansfield, D. (2018). Marketing theory: Understanding customer value.

https://builtvisible.com/understanding-customer-value/