INTRODUCTION
Value is the perceived worth to the customer of a particular product or service. It is the customer’s overall conclusion about the particular marketing mix (product, price, promotion and distribution) that it offers. (Cole, 1997)
Delivering customer value is the goal every manufacturer or business wishes to achieve. Since with a high perceived value by customer on an organisation’s products/service, the firm will be able to easily hold on to its customers and these customers may bring more customers to the firm due to spread of word of mouth. Therefore in order to achieve this goal every department in the organisation should play a part in delivering customer value.
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The value chain analysis was first introduced by Michael Porter (1985) in his book “Competitive advantage: creating and sustaining superior performance”. It describes the activities within and around an entire organization, and relates them to an analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular activity adds to the organizations products/services. This idea is based on systems approach to strategic activities (i.e. Input-Process-Output) and is illustrated in its generic form in FIGURE 1 below;
FIGURE 1: Michael Porters Value Chain (http://www.themanager.org, 2010)
MAIN BODY
VALUE SYSTEM THINKING AND HOLISTIC APPROACH
System thinking is a vital to quality, systems thinking is a way of helping a person to view systems from abroad perspective that includes seeing overall structures, patterns and cycles in systems in the organisation, rather than seeing only specific events in the system (Authenticity Consulting, 2010). In order to effectively deliver customer value, all the systems in the organisation needs to be included and they have to perform together so as to achieve this goal.
The holistic approach concept is based on the development, design, and implementation of marketing programs, processes, and activities that recognise their breadth and interdependencies (Kotler, 2009). It recognises that “everything matters” in marketing.
It is divided into four different parts which work together to deliver value, these are;
(http://www.marketingholistics.com, 2010)
Internal marketing is the task of hiring, training, and motivating able employees who want to serve the customers well. It makes no sense to promice exellent service before the company’s employees are ready to provide the service. For example, Xerox a large office equipment supplying company goes so far to include in every one of its job descriptions an explaination of how that job impacts the customers.
Relationship marketing is the desire of a company to build mutually satisfying long-term relationshipswith key elements (such as customers, employees and marketing partners) in order to earn and retain their business thus delivering the expected value.
Intergrated marketing is the process of devising marketing activities and assembling fully integrated marketing programs so as to create, communicate, and deliver value to the customers. This can be achieved through the product mix strategy, where product, price, promotion and place will determine the needs of the consumers and the company will be able to set a price that offers real value, and choose places where the offering will be accesible according to the groups of consumers available.
Performance marketing involves the managements understanding of the returns to the business from marketing activities and programs, as well as addresing wider conserns and their legal, ethical, social and environmental effects (Kotler, 2009). It involves going beyond the company’s returns on investments to analyse the marketing scorecard and interprete what is happening to market share, customer loss rate, customer satisfaction, product quality, and other measures. Thus will lead to the company knowing where it stands in the market and this is efficient in delivering value.
PARTTIME MARKETERS IN DELIVERING VALUE
In order to deliver value to customers marketing must be well coordinated with other company departments. Marketing does not work well when it is merely a department, it works only when employees appreciate their impact on customer satisfaction. Employees can be part-time marketers to the company by having brief ideas about what other deparments do thus it will be easy to assist customers at anytime without delay.
A company can have an exellent marketing department , however and fail at marketing. Alot depends on how other company departments view customers. Inorder to achieve team work among all departments, a company should carry out both internal and external marketing.
COMPONENTS OF PORTERS VALUE CHAIN
Porter’s value chain distinguishes between primary and support activities where Primary are directly involved with the creation/delivery of a product or service. They include:
Inbound logistics
This involves relationship with suppliers and include all the activities required to receive, store, and disseminate inputs. Material handling, warehousing, inventory control and vehicle scheduling are examples of these activities.
Just-in-time (JIT) inventory systems were designed to achieve efficient inbound logistics. Toyota optimises this system where part deliveries arrive at the assembly line only an hour before they are needed. This system is efficient because it will enable the company to manufacturer a customers car and deliver it within five days prior to the order. Thus delivering more customer value.
Operations
Operations are all the activities required to transform inputs into outputs(Products and services). Machining, packaging, assembling, maintainaning and testing are examples of operations.
Creating an environmentally friendly manufacturing is one way of achieving competitive advantage and delivering value. Shaw Industries, a famous company in the floor-covering industry is known for its concern on the environment. It has been able to succesfully reduce its disposal of dangerous toxic material and other wastes from its operations and has gained a good reputation and won many awards for its recycling efforts
Outbound logistics
Outbound logistics include all the activities required to collect, store, and distribute the output. These activities focus primarily on the delivery of outputs to buyers. Warehousing, materials handling, delivery operations, shiping, order processing, and scheduling are examples of outbound logistics.
Campbell Soup uses an electronic network to facilitate its continuous-replenishment with its most valuable retailers. Where each morning the retailers electronically order their products from campbell’s plant and campbell is able to deliver the orders the same day in the afternoon at the retailers distribution centres. Campbell achieved this because it slashed delivery time and because it knows the inventories of the key retailers and can deploy supplies whenthey are most needed
Marketing and sales
Marketing and sales activities inform buyers about products and services, induce buyers to purchase them, and facilitate their purchase. These activities focus primarily on the informational relationships established between the firm and its potential buyers. Pricing, selection of a distribution channel, channel management, advertising, promoting, selling, proposing, and quoting are examples of marketing and sales activities.
Service
Service includes all the activities required to keep the product or service working efficiently for the buyer it is sold and delivered. Training, consulting, installing, repairing, supplying parts, and fine tuning are examples of service.
Each of the primary activities is linked to support activities which help to improve their effectiveness/efficiency. These support activities include;
Procurement
Procurement is the acquisition of inputs, or resources, for the firm. Such as rawmaterial, supplies, and other consumable items as well as assets such as machinery, equipment and building. Although it is the designated function of the purchasing department, procurement is also carried out by every employee who purchases equipment, arranges for financing, gathers information, completes a real estate transaction, or acquires any but human resources for the firm
Technology development
Technological development (including R&D) pertains to the equipment, hardware, software, procedures and technical knowledge brought to bear in the firm’s transformation of inputs into outputs.
Human resource management
Human resource management consists of all activities involved in recruiting, hiring, training, developing, compesating and (when necessary) dismissing or laying off personnel. Human resource managers influence salary and wage levels and the overall cost of the staff and through hiring and training programs, they promote levels of skill and motivation that affects the firms general performance.
Infrastructure
Like cities, companies have infrastructure that serve their needs and tie their various parts together. In business organisations the infrastructure consists of functions or departments, such as Finance, quality management, planning, accounting and general management. These departments are responsible for holding the firm together. If the infrastructure is working well, the firm can gain a substantial competitive advantage and if not, a firm which is not effectiv e can loose its competitive advantage.
(Rowe, Mason, Dickel, Mann, & Mockler, 1994), (Dess et al, 2008), (Sekhar, 2010)
External Factors
This is the marketing directed at people outside the company such as customers and partner companies since they are the main reason for the production of products and services and are the end users of these products and services. When customers are satisfied they spread good word of mouth. But with an inadequate value provided to the customers, then the reverse is the case. Xerox factory managers know that customer visit to the factory can help sell a potential customer if the general factory environment is clean and efficient.
(Kotler, 1997)
Limitations of Porter’s value chain
The limitations of the model include the fact that ‘value’ for the final customer is the value only in its theoretical context , and not practical terms (Svensson, 2003) .The real value of the product is determined when it reaches the final consumer, any assessment of value before that moment is only something that is true only in theory. Despite this limitation, analysts can effectively use the value chain model to determine the value to final customers in a theoretical way. Use of other planning tools and techniques like Porter’s generic strategies, analysis of critical success factors and so on, is recommended in conjunction with the value chain framework for a more comprehensive analysis of a company’s strategy and planning.
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Conclusion
In conclusion, delivering customer value is the responsibility of the entire organisation at large, this includes all the departments and the employees together. If a company points at the marketing department to do all the marketing then the company has not implemented effective marketing thus it will be less efficient. It is the task of all employees to realize that their duty is to create, serve, and satisfy customers so as to achieve efficiency in the organisation and thus deliver value effectively and efficiently.
REFERENCES
ONLINE RESOURCES
Authenticity Consulting, L. (2010, July 23). Management help corporation. Retrieved July 23, 2010, from Management help website: www.managementhelp.org/misc/defn-systemsthinking.pdf+system+thinking
http://www.marketingholistics.com. (2010, July 23). Retrieved July 23, 2010, from marketing holistics website: http://www.marketingholistics.com/marketing.html
http://www.themanager.org. (2010, July 22). Retrieved July 22, 2010, from http://www.themanager.org: http://www.themanager.org/models/valuechain.htm
BOOKS
Cole, G. (1997). Strategic Management. Hampshire: Ashford colour press.
Dess et al. (2008). strategic management: text and cases (4th edition ed.). Newyork: McGraw-Hill Companies, Inc.
Kotler, P. (2009). Marketing management. New Jersey: Pearson Education, Inc.
Kotler, P. (1997). Marketing management: Analysis, Planning, implementation, and control (9th Edition ed.). New Jersey: Prentice-Hall, Inc.
Rowe, A. J., Mason, R. O., Dickel, K. E., Mann, R. B., & Mockler, R. J. (1994). Strategic Management: A methodological Approach (4 ed.). Newyork: Addison-Wesley Publishing Company, Ic.
Sekhar, G. (2010). Business policy and strategic management. New Delhi: I.K. International Publishing house Pvt. Ltd.
JOURNALS
Porter, M. (2001). Strategy and the internet. Harvard business review , 63-78.
Svensson, G. (2003). Consumer driven and bi-directional chain diffusion models. European business Review , 15 (6), 390-400.
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