Lecture Two: Outline • Customer Centricity • The Experience Economy • Demand Response • The Demand-Led Life Cycle for Calculating • The Demand-Led Capability Life Cycle • Key Success Factors
Customer Centricity • Slywotzky et al (1997) identifies customer centric thinking as deciphering the puzzle of the customer’s top two or three priorities with enough insight to have a good chance of matching those priorities profitably
Customer Centricity (cont’d) • Kotler (2000) outlines the marketing concept. “…the key to achieving organisational goals consists of the company being more effective than competitors in creating, delivering, and communicating customer value to its chosen target markets”.
Customer Centricity (cont’d) • Customer Centric organisations view customer needs as the centre of their organisation, rather than as an external stakeholder with only minimal influence on the company.
Customer Centricity (cont’d) • Slywotzky et al (1997) cited in Walters suggests that “in the old economic order, the focus was on the immediate customer. Today business no longer has the luxury of thinking about just the immediate customer. To find and keep customers our perspective has to be radically expanded. In a value migration world, our vision must include two, three or even four customer along the value chain
The Experience Economy • Pine and Gilmore (1998) suggest “As goods and services become commodotised, the customer experiences that companies create will matter most”.
The Experience Economy (cont’d) • An experience is the result of a customer’s purchase of a company’s good or service, however, if the company can improve that experience by providing easy access to complimentary goods or services, the entire experience becomes far more valuable both to the customer and company than if the customer had merely purchased one good or service
The Experience Economy (cont’d) • “Customer satisfaction measurements essentially focus on understanding and managing customer expectations of what companies already do, rather than truly ascertaining what customers actually want”.
The Experience Economy (cont’d) • Customers are not all the same in terms of their requirements.
The Experience Economy (cont’d) • One answer is mass customisation. Mass customisation involves producing differentiated products designed for specific market
The Experience Economy (cont’d) • Pine et al (2000) argue that “reducing customer sacrifice through mass customisation requires an awareness of individual customer needs and behaviour…this awareness lets companies deliberately and systematically take the next step toward more experiential offerings by instigating customer surprise, perhaps the single most important ingredient needed by any manufacturer or service provider to begin staging memorable experiences”.
Discussion Questions • In your opinion, what are some advantages and disadvantages of a customer centric organisation? • How can organisations use the ‘experience economy’ to improve their value propositions? What is the most profitable stage of economic progression? Why?
Discussion Questions (cont’d) • What are the major differences between demand in turbulent and stable markets? Why are their differences in demand patterns?