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# Module 3 Early Means-End Chain Value Models - PowerPoint PPT Presentation

Module 3 Early Means-End Chain Value Models. Module 3 Objectives. Know what a means-end chain is. Gain a practical understanding of classic means-end chain and other value models: Grey Benefit Chain Zeithaml Woodruff’s Customer Value Hierarchy Christensen’s Exploration Space

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### Module 3Early Means-End Chain Value Models

• Know what a means-end chain is.

• Gain a practical understanding of classic means-end chain and other value models:

• Grey Benefit Chain

• Zeithaml

• Woodruff’s Customer Value Hierarchy

• Christensen’s Exploration Space

• Know the differences between these models and the strong points of each relative to each other and relative to the basic value equation (value=benefits/costs).

• Be able to apply the components of these models to practical examples.

• A theoretical model defined by a series of antecedent factors (the means) that lead to or cause consequent factor (the end).

• The end factor is, therefore, a function of all “means” factors.

### Part IThe Grey Benefit Chain

or Psychological

Benefit

Product Feature or Claim

A good, service, or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers.

• The combination of features/attributes define a product offering.

• Features/attributes are the lowest, most concrete level of a product’s value hierarchy.

• Points of differentiation are generally defined by certain features/attributes.

• Emotional benefit important because it is viewed as the “highest level”, can be the most powerful. It is the “outcome” that customers experience.

Benefit

Emotional

Payoff

Practical

Benefit

Product

Feature

Grey Benefit Chain

Value = ___________

Costs

Benefit

Emotional

Payoff

Practical

Benefit

Product

Feature

Grey Benefit Chain

### Part IIPrice, Quality, and Value: The Zeithaml Means-End Value Model

Attributes

Perceived

Quality

Purchase

Perceived

Value

Intrinsic

Attributes

Intrinsic

Attributes

Perceived

Sacrifice

Perceived

Monetary

Price

Perceived

Non-Monetary

Price

Objective

Price

Figure 1 - Zeithaml’s Means-End Model

• Intrinsic attributes – comprise the actual composition of the product such as flavor, color, texture, etc.

• Extrinsic attributes – exist outside the product offering itself such as price, brand name, level of advertising, reputation (brand image), etc.

• Objective price – actual price, an extrinsic cue.

Attributes

Perceived

Quality

Purchase

Perceived

Value

Intrinsic

Attributes

Intrinsic

Attributes

Perceived

Sacrifice

Perceived

Monetary

Price

Perceived

Non-Monetary

Price

Objective

Price

Figure 1 - Zeithaml’s Means-End Model

Measurable and verifiable superiority on some predetermined ideal standard or standards.

Category Specific Higher-level Quality Indicators

• Performance

• Features

• Reliability

• Conformance

• Durability

• Serviceability

• Aesthetics

• Image

• Reliability

• Empathy

• Assurance

• Responsive-ness

• Tangibles

• Purity

• Flavor

• Freshness

• Appearance

Cross-CategoryHigher-level Quality Indicators

• Brand name

• Level of Advertising

• Reputation

• Product Warranties

• Seals of Approval

• Price

Consumer’s judgment about the superiority or excellence of a product.

“There are no best products. All that exists in the world of marketing are perceptions in the minds of the customer or prospect. The perception is reality. Everything else is an illusion.”

Quality Hypotheses that Emerge from the Zeithaml Model of marketing are perceptions in the minds of the customer or prospect. The perception

• Consumers use lower level attribute cues to infer quality.

• Consumers depend on intrinsic attributes a) at the point of consumption, b) in pre-purchase situations when intrinsic attributes are search attributes, and c) when the intrinsic attributes have a high predictive value.

Quality Hypotheses that Emerge from the Zeithaml Model of marketing are perceptions in the minds of the customer or prospect. The perception

• Consumers depend on extrinsic attributes more than intrinsic attributes a) in initial purchase situations when intrinsic attributes are not available, b) when evaluation of intrinsic cues requires more effort and time than the consumer perceives is worthwhile, and c) when quality is difficult to evaluate.

Price Hypotheses that Emerge from the Zeithaml Model of marketing are perceptions in the minds of the customer or prospect. The perception

• Monetary price is not the only perceived sacrifice.

• A general price-perceived quality relationship does not exist.

• Price as an indicator of quality depends on a) availability of other cues, b) price variation within a class of products, c) level of price awareness of consumers and d) product quality variation within a class of products.

Value Hypotheses that Emerge from the Zeithaml Model of marketing are perceptions in the minds of the customer or prospect. The perception

• The benefit components of value include intrinsic attributes, extrinsic attributes, and perceived quality.

• The sacrifice components of perceived value include monetary prices and non-monetary prices.

• Perceived value affects the relationship between quality and purchase.

Extrinsic of marketing are perceptions in the minds of the customer or prospect. The perception

Attributes

Perceived

Quality

Purchase

Perceived

Value

Intrinsic

Attributes

Intrinsic

Attributes

Perceived

Sacrifice

Perceived

Monetary

Price

Perceived

Non-Monetary

Price

Objective

Price

Figure 1 - Zeithaml’s Means-End Model

Four Definitions of VALUE of marketing are perceptions in the minds of the customer or prospect. The perception

• Value is low price.

• Value is whatever I want in a product.

• Value is the quality I get for the price I pay.

• Value is what I get for what I give.

Management Implications From the Zeithaml Model of marketing are perceptions in the minds of the customer or prospect. The perception

• Closes the quality perception gap

• IDs key intrinsic and extrinsic attribute signals

• Acknowledges the dynamic nature of quality

• Understands how consumers encode monetary and nonmonetary prices

• Recognizes multiple ways to “add value”

Extrinsic of marketing are perceptions in the minds of the customer or prospect. The perception

Attributes

Perceived

Quality

Purchase

Perceived

Value

Intrinsic

Attributes

Intrinsic

Attributes

Perceived

Sacrifice

Perceived

Monetary

Price

Perceived

Non-Monetary

Price

Objective

Price

Figure 1 - Zeithaml’s Means-End Model

### Part III of marketing are perceptions in the minds of the customer or prospect. The perception Woodruff’s Customer Value Hierarchy

Quality Management of marketing are perceptions in the minds of the customer or prospect. The perception

• Principal business strategy of the 70s and 80s.

• Objectives: improve quality of products and internal operations processes.

• Result: internal orientation.

• Customer satisfaction management (CSM)

• Purpose: to bring the “voice of the customer” into quality management efforts.

• Many organizations set customer satisfaction management (CSM) goals, but failed to measure customer satisfaction (CS).

• Those that did measure CS may didn’t necessarily act on the results.

• Many found that CS is not related to organization performance.

Woodruff’s Value Definition Movement

“Customer value is a customer’s perceived preference for and evaluation of those product attributes, attribute performances, and consequences arising from use that facilitate (or block) achieving the customer’s goals and purposes in use situations.”

Woodruff’s Value Definition Movement

• Definition adopts a customer perspective

• Incorporates both desired and received value.

• Emphasizes that value stems from customers’ learned perceptions, preferences, evaluations.

• Links together products with use situations and related consequences by goal oriented customers.

Customer Satisfaction with Received Value

Desired Customer Value

Customers’ goals and purposes

Goal-based satisfaction

Consequence-based satisfaction

Desired consequences in use situations

Desired product attributes and attribute performances

Attribute-based satisfaction

Functional Movement

Benefit

Emotional

Payoff

Practical

Benefit

Product

Grey’s Benefit Chain

Extrinsic Movement

Attributes

Perceived

Quality

Purchase

Higher-level

Abstractions

Perceived

Value

Intrinsic

Attributes

Intrinsic

Attributes

Perceived

Sacrifice

Perceived

Monetary

Price

Perceived

Non-Monetary

Price

Objective

Price

Figure 1 - Zeithaml’s Means-End Model

Satisfaction Movement

A person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his or her pre-purchase expectations.

Expectancy-Disconfirmation Model Movement

• Confirmation

• product matches expectations

• satisfaction

• Negative disconfirmation

• product delivers less than expected

• dissatisfaction

• Positive disconfirmation

• product delivers more than expected

• Satisfaction/delight

Customer Value Hierarchy Model Movement

Customer Satisfaction with Received Value

Desired Customer Value

Customers’ goals and purposes

Goal-based satisfaction

Consequence-based satisfaction

Desired consequences in use situations

Desired product attributes and attribute performances

Attribute-based satisfaction

Customer Value and MovementCustomer Satisfaction

• Both describe evaluative judgments about

product offerings.

• Both place special importance on the use

situation.

• Satisfaction is the customer’s feelings in

response evaluations of one or more use

experiences.

• But what do customers evaluate?

### Part IV MovementDiscovering What Has Already Been Discovered: Why Did Your Customers Hire Your Product?

Clayton Christensen

The Classic Approach to MovementAdding Value

• Identify the target market for a specific brand.

• Gather data (focus groups, surveys, interviews, observation) from a sample of this segment.

• Data is gathered (state-of-the-art methods) as consumers consider the brand and the product category that it comes from.

• Features and attributes that will provide “more value” are identified.

• Product designers integrate this information into the next generation of products.

• Result: unexciting, me-too, and flop products.

• Companies conduct their research in terms of product categories and technological competencies.

• They set out to truly understand what the customer’s needs and wants are, but they do so from their own perspective.

• They compare their own brand to other brands within the same product category while customers scan across product categories.

• They seek to be truly market driven, but are doing so as driven by the product category.

• In most cases of jumping to the next level of customer value, the customers themselves do not know what it is.

Examples of Marketing Myopia Movement

Failures

• Passenger buses

• Margarine

• Accounting software for small businesses

Successes

• Baking soda

• Quicken

• Milkshakes

Inventor’s Dilemma Movement

Entice customers to change their behavior in order to use the “better” product that they have come up with.

Other “Great” Inventions Movement

• Automatic Seatbelts

• Motorola’s Iridium Satellite Phone

• Chevy Avalanche

• DVD Audio

Let the Customers Do The Work Movement

• Customers are ingenious and inventive.

• Companies should simply seek to discover what has already been discovered.

• How are customers accomplishing the job-to-be-done?

Focus on Goals vs. Solutions Movement

• Customers should not be trusted to come up with new-product solutions.

• They are not expert or informed enough.

• They have a limited frame-of-reference.

• Customers should be asked for their desired goals/outcomes.

Customer Value Hierarchy Model Movement

Customer Satisfaction with Received Value

Desired Customer Value

Customers’ goals and purposes

Goal-based satisfaction

Consequence-based satisfaction

Desired consequences in use situations

Desired product attributes and attribute performances

Attribute-based satisfaction

The Exploration Space Movement

Customer motivations that are product-independent

Expression of Customer Benefits

Consumption of Specific Products

Specific Attributes

Total Customer Experience

Expression of Product Requirements

Customer Motivations that are Product-Independent

The Innovation Specification

Step 2

Step 1

Expression of Customer Benefits

Step 3

Definition & development of specific product

Consumption of Specific Products

Specific Attributes

Total Customer Experience

Expression of Product Requirements