The marketer’s objective is to take full advantage of the customer perceived value by increasing social, functional, psychological, and economic value and in turn decreasing the costs. One main challenge in introducing a value perception with consumers exists when a brand or product does not stand out in comparison to its competition. Distinction from other brands is a significant marketing emphasis. Additionally, if a company does not use market research, or if they obtain incorrect market research, they run the risk of making false expectations regarding what communications will affect
Providing a good service to one’s customer is the first step in generating consumer loyalty. Not providing a good service to a customer will only lead the latter to look elsewhere with his purchase. Customer satisfaction is a key component in having a customer that will return for future purchases. The organization need to research on its market and adapt to its demands. They need to investigate into the purchasing behavior of their audience.
The reluctance of consumer to take risk in buying a non familiar brand encourages consumer to pay a price premium to avoid the uncertainty. The positioning of a product forms an image that is used to enforce a premium price. There are various ways of branding where increase the price of branding can be obtained through the relationship between marketplace, the uniqueness of a product, and the quality and value of the product. The relationship formed between consumer and brand. When a brand is well-established, the ability to charge premium price for the branded products is an easier move.
Most consumers save up to buy good products. A brand can only rationalize a price premium if it is view by its consumers to be profoundly different from the related products. Lack of value is what makes a market full of goods where people have no emotional connect with their buying. It is significant for the brand to recognize its consumers and their anticipations before it can provide the price premium and foster brand loyalty. A premium customer is the one who paid for higher price and then is justified in expecting top-notch product quality.
It only can encourage them to responds to purchase the goods or services. The loyalty programme influences the customers to choose but the factors (economic, brand/store-loyal, hedonist, social-relational, and apathetic) drive them to the services. They also positively correlated to intrinsic motivation and have a positive, long-term impression on purchase behaviour and loyalty. The findings have significant implications for loyalty programme managers to promote diverse rewards, segment their customer portfolios, and achieve differentiation through nonmonetary and monetary benefits.
The future of an organisation which adopts such a strategy potentially lies with its consumers. If a consumer continues to purchase from the organisation when prices increase over time, then the strategy has been successful. However, if consumers only choose to retain their loyalty to a given brand whilst a penetration pricing strategy is in action, once product prices have been increased further down the line consumers could switch; proving the strategy to be unsuccessful. Organisations anticipate that consum... ... middle of paper ... ... with each other. A decrease in price will be offset with a rise in demand and vice versa, leaving TE unchanged.
The benefit of skim pricing is that you get to pick off the price-insensitive top-of-the-market clients. Who wouldn’t want this situation? The downside is that other competitors can move into the price gap, slightly beneath the skim level, then bump up the value they offer in order to challenge the skim price competitor. They may create greater efficiencies, which means their profit margins are the same, if not higher. The value proposition to the customer remains strong, yet they undercut the leader on price (Da Vanzo).
This argument is supported by Solomon (1992) with him discovering that purchase decision that is based on loyalty might become a habit which leads to brand equity. On the other hand, Aaker (1991) described brand loyalty as consumer’s mentality toward a brand that drives them to consistently purchase the same brand. As per Yoo (2000), brand loyalty has the ability to affect consumer choice to buy a same product or brand and cease to switch to other brands. Subsequently, Yoo (2000) reasoned out that brand loyalty is the root for brand’s value. Aaker (1991) additionally contended that brand loyalty is a fundamental component used to assess brand’s value due to the fact that brand loyalty can increase profitability.
There is no doubt that profitability can be an indicator of market power, but it is important to not base the decision of market power only on this aspect. As explained, the profit can also be a sign of efficiency and high profits can be achieved in competitive markets through legit actions. Profits are an incentive for firms to innovate and expand. If the profit becomes directly associated with market power, the companies may stop to invest in innovation that could lead to lower production costs. Nevertheless, small companies may not be interested anymore to expand and will try to keep their profits at a certain level that would not make them dominant.
Redefining Marketing by Creating Exceptional Value for Both Shareholders and Customers EXECUTIVE SUMMARY This report redefines marketing in terms of share holders and customers as: “Marketing is a management process that seeks to maximize return to shareholders by developing and implementing strategies to build customer relationships of trust with high value customers and creating a competitive advantage.” The report also tells us how value can be created for customers and shareholders by using value based marketing principle and taking Cadbury Schweppes as an example which became successful by creating value proposition for both customers and shareholders. Cadbury Schweppes followed the four principles by setting the right ambition, distinctive advantage, selective resource allocation, finding win-win for customer and shareholder. Creating shareholder value is then essentially about building a sustainable competitive advantage-a reason why customer prefer to buy from one company rather then the other. The only route to more shareholder value is to create more value for customers. The value to customer is created by using value proposition which are Customer Benefit- Customer must see value to them in their own terms, Unique- Customer must recognize their benefit.