Value Individuals Create Greater Customer Value Marketing Essay

This tutorial report aims to provide a clear definition of everything we understand for value, how it relates with customer goals and satisfaction and exactly how value chains are described accordingly to provide value to consumer and stakeholders. This statement also intends to demonstrate the concepts mentioned previously with the benefits of a short case-study of the English Company Ocado and its unique value proposition.

The long-term sustainable creation of value for the customers ought to be the goal of every enterprise alert to the current business environment. Although most of us have a good idea of the meaning of value, value creation and everything the concepts related to it can be complicated. Furthermore, aligning our business strategy with these concepts can be considered a complex activity. Through this report, we seek to make a few of these principles clear and show how they could be applied to an progressive and successful business strategy.

Value depends upon the great things about a product or service received by the clients less the expense of acquisition of delivered benefits (Walters and Lancaster, 2000). Value is not a new notion. In 1776, Adam Smith provided two perspectives for value. From producer point of view, value is determined by creation costs, while from customers' point of view, "it is only when it can be used that the entire costs and advantages of a product-service may be discovered" (Walters and Rainbird, 2007). Since 1980s, the customer is among the most centre of business process, this means the worthiness creation is strongly customer satisfaction structured (Walters and Rainbird, 2007). Matching to Slywotzky and Morrison (1997), "customer-centric" methodology emphasizes getting together with customer's priorities on value of something or service, and "customer priorities" are simply the things that are deemed important to customers who are prepared to pay a premium for these people or, when they cannot accept them, they'll use other suppliers (Walters and Lancaster, 2000). In addition they suggest that in a value migration world, the emphasis shouldn't be limited on the immediate customer but more customers through the value chain even including the manufacturers, the distributers and the end-consumers (Waters and Lancaster, 2000).

Utility is one of the characteristics of customer satisfaction. Bowman and Ambrosini (2000) dispute that "to judge the utility of the merchandise or service, customers' perceptions of the value of a good derive from their values about the products, their needs, unique activities, wants, desires and anticipations. " This value is recognized by the consumers; it is defined as use value. On the other hand the exchange value is thought as the monetary amount measured when the exchange of products or service take place (Lepak and Smith, 2007). However, value shouldn't only concentrate on customer satisfaction, it will include all the stakeholder satisfaction, which ensures both customers' satisfaction and expectation satisfaction of suppliers, shareholders, employees, and etc. (Walters and Lancaster, 2000). Specifically Knight and Pretty (2000) provide a concept of venture value. They mentioned that the center value of your business includes "tangible value", "premium value" and "latent value". Tangible value shows the tangible resources of an company; top quality value represents the excess part of reserve value when company deals in open up market; latent value is the potential value of any company (Waters and Rainbird, 2007).

Walters and Rainbird (2007) recommended that value creation and delivery is a complex process, which involves discovering market opportunities, exploring customer anticipations and developing a suitable value string model to meet them and on the other hand building competitive advantages. Magnet (1994) proposed that value delivery network is also known as supply chain in which companies partner with suppliers and distributors. Brown (1997), Singh and Srivastava (2008) has given the definition of value delivery network as "a tool to disaggregate a company into strategically relevant activities which enables identification of the foundation of competitive advantage by undertaking these activities more cheaply or better than its competition. This value delivery network is composed of activities performed by suppliers, marketers and end consumers. But in different ways, Christopher, Payne and Ballantyne (2002) argued that value delivery is to set-up value in the hands of the ultimate consumers by exchange of products and services through the linkage of different activities completed along the way of networking.


In order to meet customers' goals and create differentiation, relative value individuals for the worthiness expectations need to be identified. The primary customer value drivers include: advantage - capital intensity, utilisation and productivity of relevance to professional customers; time - development routine time, order pattern time, cost - set costs and varying costs, performance - product quality and trustworthiness, guarantees and service support, well-timed and exact information, and risks - including financial risk, marketing risk and social risk (Walters and Rainbird, 2007).

Regarding value creation for stakeholders (company, suppliers and distributors), to provide the expectations, the business must arrange for and discuss explicit agreements with stakeholders and examine whether the plan satisfies the expectations of most of them. The company needs to target decision making on what drives success, and provides with a competent resources management plan, from both outside and inside of the business, to be able to contribute to the primary financial objectives. Besides, the company must identify what drives current and future benefits and establish a program for performance management. The machine should be regular with both financial and nonfinancial measures of performance to help the organization's participants, from management level to personnel, to comprehend and measure the factors for successful value delivery (Anthony et al. , 1997).


If a business wants to accomplish an improved position than its competition, as stated in the previous sections, it has to clearly identify the main element value drivers, & most significantly, effectively deliver those to its customers and stakeholders. In such a section, the exemplory case of the British company Ocado will be used to depict the business's customers and their anticipations.

Company and Industry's Standard Information

Ocado is a British isles online supermarket centered on delivering groceries to homes; the supermarket chain Waitrose keeps 40 percent of the business's shares (Boyer et al. , 2002). The grocery industry in the UK is highly focused, with 59 percent of the marketplace under the control of the very best three supermarkets (Tesco, Sainsbury's and Asda) (Scott and Scott, 2006) while Waitrose is relegated to the 6th position. This intense competition has influenced Ocado to adopt a launch and learn approach, meaning there is a constant replanning level and the business improves its overall flexibility by having only one distribution centre in Hatfield, Britain from where to base its businesses, with a capacity similar to 20 stores (Scott and Scott, 2008).

Customer Identification

According to Boyer et al (2002), Ocado's main customers are those who find themselves near to the circulation centre (Hatfield), mainly feminine, with occupied spouses and small kids living in the house. Additionally, the business's strategy tailors to active consumers who stay away from shopping and browsing traditional retailing stores as they do not have plenty of free time to plan their shopping and have a fairly high income. This high income allows those to pay a premium to possess their groceries loaded and sent to their homes. The total market for these online purchasers is predicted to be between three billion and nine billion (), which represents between 5 and 15 percent of the full total United kingdom market (Boyer et al, 2002). People that buy in Ocado are willing to pay increased fees only for the satisfaction of not having to look in crowded places where in fact the time factor can be an important feature as not heading to the store does not only mean avoiding the waste of time in shopping but also in traveling, parking, etc. To be able to target this time sensitive customers, Ocado has eliminated the physical stores of the resource string, using internet as the principal channel. On top of that, the definition of a single circulation centre and a continuous upgraded planning stage and inventory management techniques permit the company to improve the delivery times and stock cycles and provide a close romance with customers that will save you them time and increases their satisfaction.

Customer Expectations

In order to accomplish better degrees of customer satisfaction it's important to meet customer objectives. Fulfilling customer goals will create value and catch the attention of more consumers. In conditions of the food industry, consumers expect to get better quality products at lower costs, fewer substitutions, timely and reliable service, fresher food, sorted items by calorie consumption or healthy information, food refined under the stringent heat range control (Scott and Scott, 2008), personalised coupons and special discounts and reduce the squandered time. These objectives are met by Ocado through its unique distribution centre, which allows it to deal with the substitution issues by providing full range of products along with very appropriate inventory management, providing better quality products by automation and professionalising the merchandise handling, temperature hypersensitive products are stored relating to their physical requirements and the "trolley trend" is prevented because of the shopping is merely carried out online. Also, online shopping allows customers to check and type items, personalize and talk about shopping lists, which will save them time by reutilizing them, and also, it promises the freshness of food; matching to Scott and Scott (2008) a tomato in a normal supermarket is handled more than eleven times, situation that is removed with the business enterprise model of Ocado. Ultimately, getting rid of the stores from the source string, as Ocado does, will help in achieving customer expectations and in creating dedicated and happy customers.

Value delivery performance measurement

Once identified the client expectations and described a value proposition to fulfil them, it's necessary to set up a performance way of measuring system that can assist us in the process of delivering value to our customers. The value delivery performance measurement system must therefore take into consideration Ocado's performance in reaching the characteristics that produce the company's service attractive to its customers. To do so, it is important to explain a criterion regarding which will be the value individuals that contribute the most to your value proposition and focus the interest on improving them.

Taking into consideration the customer goals mentioned above, Ocado differentiates itself from other online food vendors mainly by offering fresher products and less out of stock situations. Therefore, the value delivery performance measurement system should measure data regarding aspects like the number of out of stock of products within an order and the amount of customer complaints anticipated to sub-standard quality products. Ocado should also take into consideration the performance of its deliveries in conditions of reliability and reliability, volume of broken products and deliveries on time as poor performance in these aspects will most definitely mean a poor experience for a person even if he is satisfied with the merchandise received.


Understanding what customers expect in terms of value in a product or service and providing it to them must be considered a priority for each company. In doing this, we must also consider the notion of value by the different stakeholders. Ocado managed to turn into a successful company in an enterprise sector as competitive as groceries and fast paced goods retailing by targeting customers with very specific needs, creating a different value proposition than its competition and building the sufficient value chain to provide the value that these customers expect.

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