Value based marketing involves three key steps: 1) Defining target markets and understanding customer value, 2) Determining the value proposition, and 3) Delivering value and monitoring it over time. The goal is to create and deliver utility and value for customers in order to build strong, profitable customer relationships. Marketing has evolved from a production focus to a customer relationship and value-based approach. Companies that implement value-based marketing strategies map their value creation processes and work to increase customer value at every step.

1. Value Based Marketing Compiled by Bermand Hutagalung

5. Marketing: Creating Utility The ability of goods and services to satisfy wants. Form Utility Time Utility Place Utility Ownership Utility Customer need more than utility, they need value added

6. Marketing Trend : from Production to Value Based Era Production-oriented era Market-oriented era Sales-oriented era Value-based marketing era

8. Value Base Define target markets and understand customer value Determine value Proposition Deliver value Monitor value Map of Value Creation

9. Marketing and The Value Delivery Process

10. Rubbermaid Commercial Products, Inc . (example of value based vision & mission) “ Our vision is to be the Global Market Share Leader 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.”

11. WHAT’S SO SPECIAL ABOUT ? The legendary customer service

12. The Progression of Economic Value COMPETITIVE POSITION Differentiated Undifferentiated DISTINCTIVENESS Memorable Unmemorable Pine & Gilmore, “Welcome to the Experience Economy,” HBR, July/Aug 1998. Extract commodities Make goods Deliver Customer services Stage experiences

13. 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

15. Porter’s Value Chain Firm Infrastructure Human Resource Management Technology Development Procurement Support Activities Inbound Logistics Primary Activities Operations Outbound Logistics Marketing and Sales Service Upstream value activities Downstream value activities

16. Value Creation Strategy at Wal-Mart Provide value for our customers Low prices, everyday Low inventory levels Linked communications between stores Short flow times Fast transportation system Cross-docking Focused locations EDI/satellites Wal-Mart Mission Competitive Strategy Operations Strategy Operations Structure Enabling Process and Technologies

17. Marketing Focus Evolution : From Production to Customer Relationship

19. The Marketer Strategic Task : Creating Holistic Marketing 3.Value delivery 1.Value exploration (formulation) 2.Value creation Marketer - Value Based Strategy Created by Bermand 4. Customer Relationship

20. Summary of Value Based Marketing

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