Customer Perspective - Essay Example

Name: Tutor: Title: Customer Perspective Course: Date: Introduction A balance of power between the customers and manufactures has over time been largely weighted to firms producing goods and services. This clearly indicates that consumers appreciated the opportunity rendered to them to purchase new products. Today, the pendulum for the marketing sector has radically shifted to the opposite direction where customers rather than producers hold a number of cards within the purchase transaction. Technological advancement, for instance, has paved way of customer-knowledge as well as insights that directs affect the bargaining power. Therefore, it is imperative that all companies, regardless of the industry in which they operate in, walk the line so as to track their performance from the continued discriminating eyes of customers. On the other hand, measure of the consumer perspective is critical to enhancing customer satisfaction particularly when customer experience management approach is applied to solve the customer-related problems. In the new constructed customer perspective, measures such as customer satisfaction, brand audits, quality assurance as well as reputation monitoring have been proposed (Nick 2004). The study examines major problems associated with the current view of the Customer Perspective, discusses the new perspective constructed based on literature on customer value creation to overcome customers’ perspective problems and suggests a mechanism to measure the new components of the revised Customer Perspective based on the Core measures or indicators of customer perspective and Customer value proposition. A Balanced Scorecard and the integration of a company’s strategies and financial goals Successful development of customer perspective, calls for companies to respond to three major questions when creating their Balanced Scorecard. It involves answering who is the customers, what do such customers expect or demand from companies and what value proposition the company holds whilst responding to customers’ needs. Studies indicate that a Balanced Scorecard performs well if measures in all the four main perspectives, customer, Internal Business process, finance and learning and growth are appropriately set. It is quite clear that each perspective covers various aspects of the business functioning within the internal as well as external environment. Therefore, the entire group of aspects is interrelated where a success in one aspect is directly influenced by the improvements achieved in the other. The customer’s experience goes beyond the actual purchase of a product or service to include the billing and accounts receivable, product performance, repair and maintenance of contracts, complaints handling as well as after sales services and warranty. Therefore, customer perspective is an important aspect of marketing analysis because it addresses how the organization determines the needs, expectations and the preferences of customers so as to ensure the relevance of contemporary services creation of new opportunities, building of relationships with customers, involving in the measurement of the results of customers’ satisfaction and the performance of services (Prahalad & Ramswamy 2004). The Five major problems associated with the current view of the Customer Perspective Since customer is perceived as the ultimate value for business, it can be argued that customer perspective within the Balanced Scorecard implementation deserves due attention. Today, marketing grows in popularity as businesses wage struggle to attract and retain customers, encourage customers to change brands as well as buy new products. As a result, companies work to stay in touch with their customers regardless of whether they are buying from them or not, a clear indication that loyalty to brands results in substantial profits particularly in the long-term performance. Poor understanding of customers’ needs create opportunity for competitors who can effectively offer customers with products or services that sustainably meet their expectations. Due to that market fear, a focus has changed from the internal environment or processes within the company to external environment or customers and markets. In this case, delivering value to all customers has turned out to be the main goal for a number of companies. Small and medium manufacturing firms focus on delivering products or services that are highly valued by customers so as to reach their long-term financial objectives (Blattberg 2001). It is important to note that in customer perspective, therefore, a Balanced Scorecard translates both the strategy and mission statements smart market and customer-based goals. Increased competition is currently forcing businesses to focus more on satisfying the customers. This calls for the need to provide a strong customer service. Poor understanding of the difference between brand equity and customer equity, brand asset and customer asset as well as the implications of comparing brand perspective against customer perspective, poses a major a challenge for management when designing and implementing their marketing programs. Recently, an emphasis has been made on the customer-focused marketing approaches, particularly on the need to maximize brand equity and customer equity. Customer equity perspective is focused more on the profitability of the customer. However, the profitability is basically influenced by what the consumers perceive of the brand. This implies that although these two major constructs seem to be different, the consumer knowledge in terms of perceptions, feelings, attitudes and beliefs should be considered the springboard for brand and customer equity (Blattberg 2001). The new perspective constructed based on literature on customer value creation to overcome customers’ perspective problems Determining the customer perspective involves answering the question “can you effectively satisfy the customer segments?” It is important for the management to undertake a critical thinking about what is considered of value to customer satisfaction, for instance, on time deliver, conformance and warranty claims or production cycle. Estimation of the likely cost that may be incurred on a chosen segment is also a critical aspect when determining the new a perspective for customer value creation to overcome customers’ perspective problems. Channel management and setting of the different prices for different segments should be considered (Storbacka & Lehtinen 2001). Customer value is service marketing and managerial concept that should indicate the various aspects of what is considered valuable for the customers. In this context, the new customer perspective referred to as “consumption-centred service marketing” or “the consumption-oriented contextual perspective” has been constructed based on the literature on the customer value creation. This could help to overcome the problems associated with the current customer perspective. Customer value formation is perceived to be contextual in its broad sense because both the provider and customer interactions merely play the supportive role. Therefore, a company plays the role of a developer of the entire system of practice rather than an entity for pleasing the customers’ needs and wants (Shove & Pantzar 2005). The formation of customer value should be achieved based on the view that the customer is an entity engaged in the valuable practices regardless of whether the provider is also involved or not. This is because the provider only plays the role of supporter of the customer value, but not considered as the source of it. The consumption-centered service marketing, therefore, puts the consumption in a more superior position, and thus views customers through a contextual manner. In this case, a company is considered as a possible supporter of the customer’s day-to-day needs and consumption becomes the main focus which is given a productive role. From the position point of view, it is imperative to note that the consumption-centred service marketing presents consumption as the phenomenon occurring within the dynamic constellation of subjectivity and objectivity. This is in contrary to the contemporary experiential literature within the marketing context which tends to value the idea of subjectivity as the counter reaction to the related managerial objectivity marketing (Addis & Hoolbrook 2001). In this new customer perspective, customer value is embedded in practice to define it according to the practice-theoretical point of view. The four main principles associated with value embedded include, agency within the value definition, value formation as well as definition of the role of a provider. The principles help to state the approach to the customer value in accordance with the practice-theory. The practice-theoretical view of consumption would work to boost the production-service marketing and management particularly in the manufacturing firms. It is an ideal approach because of its unquestionable nature which makes it the most overriding way of thinking within the production-service marketing and management. Discussed as the reaction to both individualistic and subjective thinking, the practice-theoretical approach would focus on meeting the varying needs of different customers. To this point, therefore, it can be argued that the practice of consumption is not only concerned with what the customers thinks and feels, decides-the subjectivism understanding, but consumption should also be viewed as what the customers participates in-the objectivism understanding (Addis & Holbrook 2001). A mechanism to measure the new components of the revised Customer Perspective The two major sets of measures that will be used in the revised customer perspective include the groups of customer core management. This will focus on customer satisfaction, market share and the retention of customers. The second set is performance drivers on customer feedback so as to respond on the question about what a company should deliver to customers to enhance customer satisfaction as well as customer retention with the main objective of increasing the market share as illustrated below (Eggert & Ulaga 2002). The Core measures or indicators of customer perspective The customer core management groups will involve measuring the market share based on the identified market segments. Information about industry groups, trade associations as well as government statistics as public sources of information will be used to measure the market share. Customer acquisition and retention is also another important area that will be considered when measuring the new components of the revised Customer Perspective. In order to measure the customer acquisition, attention will be paid on the evaluation of the rate at which a particular company attracts the new customers. It is important to increase the customer, an indicator that will be represented based on the number of the new customers and the sales made from those new customers. On the other hand, customer retention will be measured from time to time so as to evaluate the change trends. Since customers can be retained by companies, it means that a high level of loyalty is required between the company and customers. Therefore, measuring customer retention will to some extent be considered the measuring of customer loyalty. This will enable companies to either maintain or improve the current revenue levels (Mirel 2004). Customer satisfaction is yet another mechanism that will be used to measure the new components of the revised Customer Perspective. This is because successful functioning and measuring of customer acquisition and retention depends on how effectively a company meets the needs of customers. While measuring the customer satisfaction, it will be important to consider that satisfied customers are easily kept loyal to the company. Therefore, customer satisfaction surveys such as mail surveys, personal meetings as well as telephone interviews to give room to customers to rate conversations through call center operators or the quality of services that will be made at sales centers. In order to evaluate the efficiency of actions taken in the marketing campaigns of the already discussed measuring mechanisms, customer profitability will be considered a clear indicator of customer perspective. Although it is hard to satisfy all the needs or demands of customer, however, a compromise should be reached between the profitability and customer satisfaction (Nick 2004). Customer value proposition is the second component that will provide a mechanism for measuring the revised Customer Perspective as illustrated below. Customer value proposition From the above illustration, it can be noted that value propositions is a clear way to understand drivers of core measures that will enable the marketing management to appropriately respond to the question “what should be done to enhance customer satisfaction”. This will be measured in three major groups namely, attributes of the products or services in regard to their price, quality and functionality. This implies that different attributes will provide different target groups value. Image and reputation is also a customer value proposition mechanism that will be considered when measuring the revised Customer Perspective (Prahalad & Ramswamy 2004). It is important to mention that excellent reputation creates more opportunities for acquiring the new customers as well as retaining the existing ones. While image creation acts in either way because a company can develop its own image and can as well customize an image for a customer. Most customers have a tendency of referring themselves to a particular target group or possibly customer image that was developed by a company, though may not entirely fit the image. In order to establish a feedback system that can enable the manufacturing marketing management to learn the customer attitude towards their product and services, requests and propositions made by customers, customer relationships will be considered an ongoing mechanism to measure the revised Customer Perspective (Ulaga & Chacour 2001). It is imperative to argue that the popularity of all the marketing measures as well as the size of the marketing budget proves that high sales, increased acquisition and retention of the new customers to maximize revenues can be promoted through advertising and the marketing campaigns. Therefore, customer perspective measures can work best if well integrated into the strategies and financial goals of a company. This help to avoid developing inappropriate marketing campaign that cause huge losses or provide only the short-term outcomes. In this case, a Balanced Scorecard would be considered effective in aligning the customer measures and objectives alongside with the strategic goals of a company. It is arguable that customer perspective of a Balanced Scorecard is a vital part of the approach because without customers businesses would no longer be making profits. For example, when Kaplan and Norton considered factors that affected the decision made by their customers to use and return to their business, they discovered that the product and services supplied, good relationship management with their customers and the company image were entirely fundamental (Kaplan & Norton 2004). Customer feedback is critical to the customer perspective, and thus it is risky for the marketing management to assume anything concerning customers. Regular gaining of feedback helps to address the learning and growth as well as the internal business perspective of a Balanced Scorecard. Customer perspective can, therefore, be addressed in a Balance Scorecard framework by use of metric where the overall satisfaction ratings is measured through surveys and polls. A target can also be used measure customer perspective based on an appropriate scale and major customer groups such as youths, adults or elderly. A method can be applied where businesses may involve in regular customer surveys in which the customer or respondent may be asked to rate according to his or her own overall satisfaction. The collected metric data can be compiled either on monthly or yearly basis for financial analysis and decision-making in a company (Zaltmann 2003). Conclusion Customer perspective measures can work best if well integrated into the strategies and financial goals of a company. A Balanced Scorecard is an effective approach to the alignment of the customer measures and objectives alongside with the strategic goals of a company. It performs well if measures in all the four main perspectives, customer, Internal Business process, finance and learning and growth are appropriately set. Customer value formation is perceived to be contextual in its broad sense because both the provider and customer interactions merely play the supportive role. Excellent reputation creates more opportunities for acquiring the new customers as well as retaining the existing ones. Customer perspective is an important aspect of marketing analysis. It addresses how the organization determines the needs, expectations and the preferences of customers so as to ensure the relevance of contemporary services creation of new opportunities, building of relationships with customers, involving in the measurement of the results of customers’ satisfaction and the performance of services. Bibliography Addis, M & Holbrook, M.B, 2001, “The conceptual link between mass customization and experiential consumption, understanding of subjectivity”, Journal of consumer behavior, 1(1), 50-66. Blattberg, R.C, 2001, Customer Equity, Building and Managing Relationships as valuable assets, HBS Press Book, Boston. Eggert, A & Ulaga, W. 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