IV - Recent Issues in Marketing Strategy

What Customer Want

Customer Value

• Customer value is best defined as how

much a product or service is worth to a
customer.
• It’s a measure of all the costs and
benefits associated with a product or
service.
• Examples include price, quality, and
what the product or service can do for
that particular person.
• There are also monetary, time, energy,
and emotional costs that consumers
consider when evaluating the value of a
purchase.
•

How is customer value created?

• JCustomer value isn’t only about

money.
• It’s typically created through the
solution that a product or service
provides, not only to the buyer but to
their organization as well.
• Keep in mind that customer value is
subjective.
• Price is universal—it will cost every customer the same amount to purchase your
product or service.
• But the value will be different for every buyer because it involves so many variables,
including customer experience.
 • Similarly, if you’re selling software to multiple companies, your customer value will be
higher for a business that relies on your product to run every department than for a
business that only uses your product within one department. Ex : A Tally Software

Why is customer value important?

• Delivering customer value is key to

maintaining long-term relationships with
existing customers and earning repeat
business.
• It’s an important part of meeting
customers’ needs and expectations and
learning how they change over time.
• Knowing how customers feel about your
product and the service experience you
offer is key to building customer
loyalty and increasing customer lifetime
value.

How to measure customer value

Customer value optimization starts with

measuring it.

1. Ask customers a small set of questions

2. Determine customer benefits and

customer costs

3. Determine if the benefits outweigh the

costs

Customer value formula

Total Customer Benefits — Total Customer Costs = Customer Value

You’ll need to subtract total customer costs from total customer benefits.
There are two key types of customer benefits:

i. Product and/or service value and

service experience value.
ii. Other types of customer benefits
can include social value, personal
value, and psychological value.

Benefits and costs can vary depending on the

needs of a specific customer group. Customer
personas, journey maps, and support data can
help you segment your customer base.

9 tips for increasing customer value

1. Personalize your support interactions

2. Provide multichannel support options

3. Create a robust onboarding program

4. Prioritize customer success

5. Address patterns in support issues

6. Make sure customers know you’ve heard

them

7. Find opportunities to surprise and delight

8. Acknowledge and reward customer loyalty

9. Give your customers a sense of community

Creating customer value for long-term success 

What Is Conjoint Analysis?

• Conjoint analysis is a form of

statistical analysis that firms use in
market research to understand how
customers value different
components or features of their
products or services.
• It’s based on the principle that any
product can be broken down into a
set of attributes (Characteristics)
that ultimately impact users’ perceived value of an item or service.
• Conjoint analysis is typically conducted via a specialized survey that asks consumers to rank
the importance of the specific features in question.
• Analysing the results allows the firm to then assign a value to each one.
1. Price Elasticity
2. Optimal Price Point
3. Willingness to pay
4. Forecasting the demand
5. Brand Value

Types of Conjoint Analysis

Conjoint analysis can take various forms. Some of the most common include:

• Choice-Based Conjoint (CBC) Analysis: This is one of the most common forms of conjoint
analysis and is used to identify how a respondent values combinations of features.

• Adaptive Conjoint Analysis (ACA): This form of analysis customizes each respondent's survey
experience based on their answers to early questions. It’s often leveraged in studies where
several features or attributes are being evaluated to streamline the process and extract the
most valuable insights from each respondent.

• Full-Profile Conjoint Analysis: This form of analysis presents the respondent with a series of
full product descriptions and asks them to select the one they’d be most inclined to buy.

• MaxDiff Conjoint Analysis: This form of analysis presents multiple options to the respondent,
which they’re asked to organize on a scale of “best” to “worst” (or “most likely to buy” to “least
likely to buy”).
What is Conjoint Analysis Used For?

Most often, conjoint analysis impacts pricing strategy, sales and marketing efforts, and
research and development plans.
Conjoint Analysis in Pricing
Conjoint analysis works by asking users to directly compare different features to determine
how they value each one. When a company understands how its customers value its
products or services’ features, it can use the information to develop its pricing strategy.
For example, a software company hoping to take advantage of network effects to scale its
business might pursue a “freemium” model wherein its users access its product at no
charge. If the company determines through conjoint analysis that its users highly value
one feature above the others, it might choose to place that feature behind a paywall.
As such, conjoint analysis is an excellent means of understanding what product attributes
determine a customer’s willingness to pay. It’s a method of learning what features a
customer is willing to pay for and whether they’d be willing to pay more.
Conjoint Analysis in Sales & Marketing
Conjoint analysis can inform more than just a company’s pricing strategy; it can also inform
how it markets and sells its offerings. When a company knows which features its
customers value most, it can lean into them in its advertisements, marketing copy, and
promotions.
On the other hand, a company may find that its customers aren’t uniform in assigning
value to different features. In such a case, conjoint analysis can be a powerful means of
segmenting customers based on their interests and how they value features—allowing for
more targeted communication.
For example, an online store selling chocolate may find through conjoint analysis that its
customers primarily value two features: Quality and the fact that a portion of each sale
goes toward funding environmental sustainability efforts. The company can then use that
information to send different messaging and appeal to each segment's specific value.
Conjoint Analysis in Research & Development
Conjoint analysis can also inform a company’s research and development pipeline. The
insights gleaned can help determine which new features are added to its products or
services, along with whether there’s enough market demand for an entirely new product.
For example, consider a smartphone manufacturer that conducts a conjoint analysis and
discovers its customers value larger screens over all other features. With this information,
the company might logically conclude that the best use of its product development budget
and resources would be to develop larger screens. If, however, future analyses reveal that
customer value has shifted to a different feature—for example, audio quality—the
company may use that information to pivot its product development plans.
 Additionally, a company may use conjoint analysis to narrow down its product or service’s
features. Returning to the smartphone example: There’s only so much space within a
smartphone for components. How a phone manufacturer’s customers value different
features can inform which components make it into the end product—and which are cut.

Customer Segmentation Analytics: Precision Targeting for Maximum Impact

• Customer segmentation analytics is crucial for personalized marketing strategies and
enhanced customer experiences.
• Predictive analytics and AI are transforming segmentation by focusing on customer
behavior.
• Precision targeting through predictive analytics helps businesses identify high-value
customers and new opportunities.
• Behavior-based segmentation goes beyond demographics to create dynamic segments
based on actual customer behavior.
• Implementing precision targeting strategies with advanced analytics tools can drive
business impact and improve customer experiences.
What is demand forecasting?

• Demand forecasting is the process of estimating how much demand there will be for
a product in the future.
• Demand is typically measured in sales, so the goal of demand forecasting is to predict
how many units of a particular product you will sell in a given period of time.
• If you forecast demand accurately, you’ll end up with enough inventory to fulfill all the
customer orders for that product without accidentally overstocking (which increases
your inventory holding costs) or understocking (which can lead to costly stockouts and
backorders).
• You will also be able to improve decision-making across your supply
chain, warehousing operations, and inventory management.
• To forecast demand as accurately as possible, many brands track historical sales and
order data, and analyze it for patterns that can help them predict what might happen
again in the future.
Types of demand forecasting techniques
There are various ways businesses can forecast demand. All demand forecasting models
leverage data and analytics over specific periods of time.
Macro-level

• Macro-level demand forecasting looks at general economic conditions, external forces,

and other broad things disrupting commerce.
• These factors keep a business in the know around portfolio expansion opportunities,
market research intel, and other shifts in the market.
Micro-level
Demand forecasting at the micro-level can be specific to a particular industry, business,
or customer segment (e.g., examining demand for a natural deodorant for millennial
customers in Chicago, IL).
Short-term

• Short-term demand forecasting looks to predict demand within a short period of time,
usually less than 12 months.
• These demand forecasts often inform a brand’s day-to-day operations and inventory
management (e.g., planning production needs for a Black Friday/Cyber Monday
promotion).
Long-term

• Long-term demand forecasting is looks to predict demand over a longer period of time,
usually a year or more. Long-term forecasts help a brand identify and plan for seasonal
patterns, may influence its growth trajectory, and informs its overall business strategy.
• For instance, if a brand forecasts high demand for the next five years, stakeholders may
feel more comfortable opening a new facility, expanding internationally, or launching
new channels.

Developing a pricing strategy

• Demand forecasting doesn’t just help you maintain ideal inventory levels – it can also
enable you to price products based on demand.
• For example, if there is a limited supply of a high-demand product, you can use the
scarcity principle to increase the price as an exclusive offer.
• Alternatively, if you have an excess amount of a product that has little to no demand,
you can put it on sale or bundle it with another product to move it out of your
warehouse.
• Sometimes, you can even manipulate demand through your pricing. For instance, if
you choose to slash prices or put an item on promotion, demand may temporarily
increase for that product.
• Conversely, if you are running low on a particular SKU, you may consider increasing
price slightly to deter high demand levels that you wouldn’t be able to support.
 • By understanding the market and potential opportunities, businesses can grow,
formulate competitive pricing, employ the right ecommerce marketing strategies, and
invest in their growth.

Examples of demand forecasting methods

A small business may be on a conservative growth plan, while another company may be
scaling or diversifying with aggressive growth plans. The demand forecasting examples below
walk through a couple of different scenarios.

Example 1

• A grocery store looks at sales trends from last year’s Thanksgiving week to prepare
adequate inventory levels for the upcoming season.
• They look at sales leading into that week last year for seasonal products like turkeys,
cranberries, and mashed potatoes.
• It was a great holiday sale for them. But eight months ago, a competing grocery store
opened four blocks away, so they’re unsure how Thanksgiving demand will be affected
and if local customers will buy ingredients from their competitor.
• At the same time, a lot of families continue to move into the neighborhood, and
they’ve still grown an average of 1% month-over-month since the competing chain
opened.
• They plan to launch a few more ads than last year through channels that have proven
a good ROI for them in the past and also offer some new deals to position themselves
as the go-to Thanksgiving destination. Their calculations project a 5% increase in sales
from last year.