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BRL-013 UNIT-1 Introduction to Customer Value Management |IGNOU BBARL NOTES

brl 013 unit 1 introduction to customer value management

UNIT 1 INTRODUCTION TO CUSTOMER VALUE MANAGEMENT

* TOPICS IN THIS CHAPTER :-

Note: You can also redirect to any questions answer by clicking on any below question. Thankyou...



1.1 INTRODUCTION:-

- Retail Industry, like others, needs to be adaptive to the customers who are unpredictable, choosy and may not be loyal.
- One of the prime challenges faced by managers is to attract customer and retain them in the business to attain growth in highly competitive environment.
- The product and the prices among the competitors are moving steadily close together.
- The conventional bases for product differentiation, is becoming ineffective day by day.
- Now it has become inevitable to look for new ways and means to differentiate.
- Fast introduction of technologies are resulting into rapid changes in customers’ perceived “needs” and “values”.
- Customer Value Management, popularly called as CVM, perhaps, is one of the effective choices to attract and retain the customers in the business.
- CVM approach is now being used to identify the “value” that can be delivered to the customers.
- This “value” is not related to product and its benefit itself, but also has to be coupled with processes and services to be offered to the customers.
- For example when a customer buys an air conditioner, he is not only given AC but is also given services with the AC like installation, demonstration, warranty and few free services.
- Smart and successful companies are making their strategies in a way so that they can deliver ideal “customer defined value” to their target customers.
- Companies, especially in retail sector, are institutionalising this approach to strike a proper cord between their customers’ idea of ideal value delivery and the capabilities of the business to deliver that value.
- Customer value management presents a new basis for competition and growth.
- Businesses that know what customers value is, know how to deliver this value better than their competitors and when it is important to communicate with customers so that they perceive that the true value is delivered.
- This helps the business to achieve competitive advantage, better business results and shareholder value.
- The challenge for business is to turn this understanding into practical action that delivers measurable results.
- The idea that business success comes from focusing on customers is not new, and vision and mission statements are full of inspirational language about creating value for customers.
- The companies now measure the quality of their products and services from the viewpoint of customer satisfaction.
- Why a customer chooses one company’s product over other? Is it brand, price, service or personal experience? Customer value management is proving its worth in increased market share and shareholder value for the companies that practice it.
- In this unit you will learn about customer value management, its importance, need and benefits that it gives to the businesses which practice it and the factors which influence CVM.
- You will also learn the long term implications of CVM, emergence of rural customers and ways of institutionalizing customer value philosophy.



1.2 THE CONCEPT OF CVM:-

- Customer Value management deals with understanding customers’ expectations from the business, analysing customers’ value and delivering that to them effectively to get the delighted customers because delighted customers ensure success.
- We will discuss Customers’ expectations in detail in unit 2.
- Let us now understand what customer value is and how should it be analysed and discuss in detail the Customer Value Management approach.

1.2.1 Customer Value and its Determinants:-

- Customer value is the customers’ perceptions of what they want to be happened (i.e. the consequences) in a specific use situation with the help of a product or service offering in order to accomplish a desired purpose/goal.
- However, customers define value as :
* Availability of products and services at lower price
* Whatever specification / features a customer wants in a product or service
* The quality of a product / service a customer gets for the price he pays
* Cost benefit analysis (Benefits from product is a summation of functional benefits and emotional benefits)
- To put it simple we can say that customer value is based on three important factors.
- They are quality, service and price.
- This is also popularly known as customer value triad “qsp” (quality + service + price)
- The process of determining customer value involves several steps which are as follows:
- Step 1:Identification of Customer Value Analysis (qsp)
- Step 2:Deciding the most crucial element of qsp
- Step 3:Analysis of customer value delivery mechanism (how well or poor the delivery is)
- Step 4:Knowing the reasons for execution (customer value delivery) Step 5:Studying the changing behaviour of the customers.

1.2.2 Customer Value Analysis:-

- The first step that a business must take is to analyse the customer value.
- Customer value analysis develops a quantitative picture of the markets in which the businesses compete.
- This requires certain information.
- This information helps in understanding:
a)What do the customers want?
b)How are competitors performing against these wants?
c)Whether business is delivering the desired value to customers in comparison to its competitors?
d)What is the real worth of the product?
e)What improvements are required to make the product worth to the customers?
f)How to determine the competitive prices?
g)How do customers perceive the business brand?
- Various surveys and market research is done to get this information.
- Afterwards, with the help of the experts, strategies are formulated for institutionalising (practicing) Customer Value Management.
- Let us now discuss about customer value management.

1.2.3Customer Value Management:-

- Customer value management as defined by Khalid and Scott is a systematic approach to:
1.understand what causes customer purchase and repurchase behaviour,
2.predict the future purchase behaviour of customers and potential customers, and
3.maximize future purchase behaviour by managing the predictors.
- It is a process that enables businesses to determine how well they address the expectations, perceptions and needs of prospective and direct customers, distributors and end users.
- It also involves the study of processes / strategies adopted by competitors in institutionalising CVM.
- Customer Value Management can be described as a tool to manage each customer’s relationship with the business so that a business can achieve maximum lifetime profit from the entire customer base.
This enables companies to retain their customers and earn customer loyalty. Retaining customers is very cost effective.
- Attracting new customers is a costly affair vis-a-vis retaining the existing customers.
- A detail discussion on this is presented in unit 7.
- Every customer is not necessarily be equally profitable to business. Some customers may be more profitable.
- Still, each of them should be managed to maximise overall profit.
- Management undoubtedly gives more focus and attention to those customers who are highly profitable for the business.
- Customer value management approach is different marketing strategy because it advocates the shift of business focus from product and marketing campaign to considering and managing the profitability of each individual customer over the entire life of relationship.
- A customer value manager should always be eager to understand and analyse who is the customer and what can be offered to them to increase their life time value which is known as Customer Lifetime Value (CLV).
- Companies institutionalising this approach should develop the analytical and operational capabilities to do so.
- A simplified view of customer life time value is:
    CLV = purchase size x frequency x duration
- So the business goal of customer value management is to increase the size and frequency of purchases and extend how long the customer continues to buy.
From a managerial perspective, customer value management is a learning system, in which customer strategies can be constantly improved based on continuous evaluations of prior customer strategies.
- Companies can increase the value of their customer base by :
(1)attracting new customers,
(2)increasing customer retention, and
(3)creating customer expansion.
- This should occur in a balanced and coordinated manner.
Process of CVM:-
- There are three important components of customer value management.
They represent the three stages in the process of customer value management
a)Right customers (acquiring right customers)
b)Right relationship (developing strong relations with those customers)
c)Right retention (keeping valuable customers in the business)
- They are popularly known as 3 Rs of CVM
a) Right Customers:-
- The customer value management cycle starts with acquiring the customers who will be most valuable to the business.
- Now the question is, who are these customers? Right customers means those who will repeat dealings with the business for a long time.
- The rising businesses can no longer afford to indiscriminately recruit customers without examining their long-term value.
- To sum up we can say that right costomers are the customers who are highly profitable to business i.e. they have high CLV.
- Frequency of purchase might reveal that a subset of these customers have a very high lifetime value, because they have regularly made these small purchases every week for the past ten years.
- Such deep understanding of who are the best customers, and why, enables the business organisation to target those new customers that they can most profitably serve.
- Customer vintage analysis (examining the loyalty and profitability of customers who joined at different times through different channels) adds insight into where the best customers come from.
- Perhaps customers who joined during a price promotion left quickly, while those who joined after an exchange offer stayed.
b) Right Relationship:-
- Even with the most well chosen customers, managers must develop the relationship.
- Customers who don’t receive the right touch or get too many conflicting offers lose rather than gain value.
c) Right Retention :-
- Right retention means retaining the right costomers (those who are profitable) in the business, because it is very cost effective.
- Point to be remembered here is that customer retention should be effective.
- Effective retention means retaining the right customers, not every customer.
- Managers need to focus their retention actions on customers with the highest lifetime value.
- You will learn in detail about customer retention in unit 7.



1.3THE IMPORTANCE OF CVM:-

- Customer retention is quite cost effective affair.
- Experienced customers become more efficient in dealing with the business.
- Loyal customers are very scarce.
- But they are significant source of value; hence they are an asset to the business.
- A business manager has to maintain this crucial asset.
- The overarching strategy of CVM is to deliver a better value proposition than the strongest competitor in each targeted market segment.
- The premise is that a value proposition is at work, and CVM provides a systematic methodology of modeling the value proposition relative to competition by operationalizing the results through process improvements, communicating these improvements to the employees and customers, and linking them to financial performance.
- Importance of CVM can be listed as below:
a) CVM represents the best practices used by retailers to attain their visions of finding out what their customers want and giving it to them.
b) CVM provides a rational set of techniques, methodologies and strategies to weave the needs and wants of customers into key processes and management activities of a retail organization.
c) CVM approach drive customer loyalty and growth, and are becoming pathways to understanding the needs and wants of customers, making changes in the management process to not just retaining existing customers, but to influence new customers as well.
d) CVM is a way of doing business. If employed correctly, it can help a retail enterprise create and sustain differentiating value.
e) It is the mechanism to understand what customers want from an organization, and how a retail organization can go about aligning their business to deliver that product / service consistently.
*Success stories of few businesses which have institutionalised CVM approach are given below to explain the significance of CVM.
A.Box Plant Turnaround: Growth and profitability rebound in the middle of an industry depression
- A prolonged cyclical downturn was squeezing manufacturers of corrugated boxes in the Midwest USA.
- One key competitor of company’s client, a leading paper company, had just folded.
- Using the value map and other tools, it became clear that, based on Plant A’s customer-perceived positioning, there was a good chance that Plant A would be next.
- The same data that showed Plant A’s relatively poor customer-perceived value also showed the way for Plant A to recover.
- For Plant A to improve customers’ value for money, it needed to correct its poor ratings on delivery, and on a few other attributes.
- In plant A’s case the solution was to focus on customers who were willing to schedule deliveries on a predictable basis, and not try to serve those customers who needed high flexibility.
- By changing its value proposition to focus on its strengths and on customers that valued those strengths, Plant A greatly strengthened its customer-perceived value.
- Customers loved the value they were getting, profitability skyrocketed, and sales, bucking continued downward industry trends, grew rapidly.
B.Electronic Controls Find a New Market: The voice of the customers’ customer provides the key
- The CEO of a major industrial equipment company was dissatisfied with the company’s slow growth, and launched a major growth initiative.
- Everyone in the company was on the hot seat to identify where incremental growth could come from.
- The Controls Division had an idea involving components for a commodity piece of equipment.
- To the old hands at the company, the idea had all of the hallmarks of a disaster.
- The company prided itself on its technology; the new market was low tech.
- The company had a strong brand name; the opportunity was to manufacture a component inside of a commodity product where the company’s brand name would not be visible.
- But it was a new market, and that could mean growth.
- While the old hands at first dismissed the idea, they started to warm to it as they explored the possibilities.
- They went to their customers’ customers and profiled their needs.
- Then they went to their engineers and prodded them to find ways to apply their advanced technology to the end user’s problems.
- At the end, they came up with a component family that could vastly improve their immediate customer’s products.
- They used value mapping and other customer-value displays to show how, despite higher prices, products featuring their new components actually gave customers better value.
- Their customers bought their concept, giving the company credit for actually measuring the end customers’ perceptions better than they did.
- They made the sale, and launched the product successfully.
C.Tech Services Find Room For Improvement: Customer value analysis flags some pervasive problems
- Large companies are plagued with inertia; successful companies are plagued with complacency.
- So, large successful companies often find it difficult to react quickly to inroads by hungrier, smaller, and nimbler competitors. “Big Tech”, by all measures the model of a successful company, found that smaller competitors were taking bites of market share out of some markets that they had considered “locked up.”
- However, their customer metrics showed that their perceived quality was unrivaled, so the causes of the erosion were not apparent.
- Using Customer-Value concepts, Big Tech added perceived price metrics to its analyses.
- The metrics showed that, although Big Tech had great products, the value that customers were getting was not necessarily good.
- The products were not quite good enough to justify the price premiums.
- Looking at the performance data, however, suggested a number of areas where Big Tech was not leveraging its scale and technology advantages as fully as it could.
- The way to better value was better service, not lower prices.
- Several Director-level participants in a customer value workshop stepped forward as champions for major initiatives to secure a leadership role for Big Tech in two areas where its scores were lagging its potential.



1.4 WHY IS CVM REQUIRED IN RETAIL?:-

- CVM is required in retail to understand the different customer needs that reflect the corresponding customer value dimensions in the retail context.
- Customer needs are primarily of four types: functional needs, esteem needs, experiential needs and economy needs.
- Functional needs are those that motivate the search for products that solve consumption related problems.
- Esteem needs are desires for the products that fulfill internally generated needs for self enhancement, role position, group, group membership, or ego identification.
- Experiential needs are desires for the products that provide sensory pleasure, variety or cognitive stimulation.
- Economy needs are fundamentally to consider the lowest cost options available in the market.
- Therefore, the above set of diverse needs necessitate the importance of CVM in retail.
- More specially, CVM is required in retail because of two reasons:
1.In the customer’s preference set which store is considered
2.To understand the determinants of customer value
- Customers’ preference for a retail store depends on the threshold value (may be referred as equi-marginal utility) allotted by customer and if the perceived value is less than the threshold value allotted, the customer may not choose the store for shopping.
- Both the threshold value and perceived value are connected to the needs of customer.
- The retail atmospherics consisting of environmental elements such as bright or dim lighting, classical or familiar music, attractive window dressing and layouts, magnificent architectural design, freshness and fragrance, appropriate temperature to make it cosy and comfortable, soothing and trendy color, attractive logo, and gentle crowding are ideal conditions that can affect the current and future behavior of consumers (Smith and Burns, 1996).
- These are explained in more detail in the next section along with the impact of employees interaction with customers and the external factors such as location of the store and word of mouth of customers.



1.5FACTORS INFLUECING CUSTOMER VALUE GENERATION:-

- Factors influencing customer value generation is broadly divided into two parts:
1 Internal Factors
2 External Factors

1.5.1 Internal Factors:-
A. Store related
Atmospheric cues: Customer spending behaviour can be significantly influenced by the store atmosphere and the customer mood.
- Customers require a store layout that maximizes the number of products seen within the context of a customer’s need for the product.
- Customers who experience a form of personal control, whether in orienting themselves to the store section they need to go to or in finding the products they want, generally feel good about the store.
- Good feelings lead to more purchases, especially if products are presented within a display that shows the potential usefulness of the product for them.
- Atmospheric Cues which denote symbols or objects in the store environment proximity has been at the centre of numerous discussions recently as a means of creating a pleasurable consumption experience; engaging and luring customers, with hopes that they will increase their likelihood to purchase, revisit and recommend to others.
- Seven of the atmospheric cues are discussed below
1 Colour
- Customer often associate brand and store image with their color.
- Brands like McDonalds uses red and yellow color to communicate leadership and happiness.
- Colors have differences in their significance, with changes in cultural context.
- For example, the color black has different significance in western and eastern cultures.
- Universally the color pink is used to communicate feminity, green is used for freshness natural, and vegetarian, and so on.
- Moreover, the color preferences of consumers change with change in fashion, fad, and trend.
2 Lighting
Discussion with retailers in India revealed that lighting affects customer’s attraction and choice of retail store and visibility in evaluating products’ features, price, ingredients, labels, etc.
3 Music
- Music variations such as fast, slow, classical, instrumental, and hit numbers influence customers ’ mood.
- Changing music in different parts of the store was found as influencing factor that can alter customers’ mood or appeal to different customer segments.
- Music can potentially increase customer value and shopping volume by providing relaxation and calmness to the customer so that beneficial associations are created in the mind.
- The customers’ interest in shopping, pleasure, and time spent depend on the nature of these associations.
4 Design and Layout
- Design factors can create attraction and uniqueness to appeal to people at a focal point by signalling a pleasant and worthwhile experience.
- The design aspects of retail stores are an ideal convergence of artistic ideas, instinct, and business in a planned and profitable manner.
- Store’s layout may communicate value by increasing search efficiency, comfort, inventory capacity, product quality, price and product displays, etc.
- Signage and window dressing is the face index of the store that can attract or repel customers from the store.
- Customers may develop associations of trust, value, quality of goods and services, price, warranty and guarantee, etc as they come across visuals such as signage, window dressing, logo, etc. based on past shopping experiences.
- Signs and graphics used in the store act as bridge between the merchandise and the target market.
- Design factors create theatrical effect, add personality, beauty, and communicate store image.
5 Olfactory factors
- Olfactory factors (related to sense of smell) like scent, freshness, etc.
- These are also very important in keeping cutomers happy as they may influence the mood of the customer.
6 Tactile Factors
- Tactile factors like temperature and smoothness of floor.
- Many customers enter into retail outlets just to escape the unpleasant temperature or weather outside and for fun and end up doing impulsive buying.
- These customers can be retained in the business, once they enter into the store.
- The tactile factors create aesthetically sensitive environment that potentially increases customers’ value due to personal comfort and aesthetic values.
- Customers in India often choose stores that facilitate comfort and environmental control.
- For example, during summers, customers often prefer to seek solace and comfort in stores with aircooling facilities.
- These factors increase customers’ exploratory tendencies and sensation seeking behavior.
7 Product offerings
- This includes types of product items, product assortment and variety of brands offered for each product.
B Employee related
- Employees of the retail store offering the highest quality of customer service will be creating Customer value .
- Providing customers value through their people element can be demonstrated by some companies like South West Airlines.
Max Health Care operates a Mentor Programme:
- Under this unique program each patient is assigned a member (may be managers, non medical people, executives or even doctors) who are the single contact points for every requirement of the customer (either for doctor, cleaning, food or may be even for general enquiry).
- A mentor acts as the first touch point to the patient for every requirement and his job is to get the work done.
1.5.2. External Factors:-
1 Location
- The importance of location of the retail store is substantial in generating customer value that relates to convenience or in fulfilling esteem needs of customer or maybe both.
- For example, when a customer shop from big stores for instance, Shopperss top in Ansal Plaza Complex, South Extension, New Delhi.
- It serves the esteem needs of customer just to be seen shopping there.
- Needless to say, a good location brings with it ample parking space so that customers find it convenient to park their vehicles and enjoy hours of shopping.
2 Word of mouth
- Customer’s buying decisions are influences by the word of mouth of customer’s social environment which could include family, peers and friends.
- They affect buying decisions by offering information and providing feedback, recommending the retail brands they liked and enhancing a customer’s self-image.



1.6 BENEFITS OF CVM:-

- Customer value management is beneficial to both the parties; retailers as well as the customers.
A Benefits to retailer / business:
i) Helpful in development and implementation of a business vision to become customer centered i.e. be number one in the eyes of their customers.
ii) Easy to implement strategy to differentiate and compete on service and value to customers, not merely on products and price.
iii) Helpful to understand that what drives customers’ loyalty and deliver them the same.
iv) Not only helps to understand its customers but also benefits a retailer or any business in creating, growing and retaining customers.
v) Helps to know and understand customers’ needs and expectations.
vi) Enables the businesses to increase customer loyalty.
vii) Helpful in formulation of future planning with a view to meet the customer expectations.
viii) Helps in identifying profitable customers, which also improve the profitability of business.
ix) Builds an emotional bond between retailer and customer which helps in retaining customers and retention of customers reduces the sales cost.
x) Enhance the satisfaction and retention of the customers which ensures the good reputation of the business in the market.
xi) Helps in increasing sales, because every retailer tries to provide the product/ services according to the needs and expectations of the customers.
B Benefits to customers
i)Customers get products/services as per their need and expectations.
ii)Every retailer/ business tries to meet the customers’ expectations which automatically help them economically and provides them the desired services.
iii)Helpful in building strong emotional bond with retailers/businesses.



1.7 INSTITUTIONALISING CUSTOMER VALUE PHILOSOPHY:-

- Customer Value Management is a very powerful tool to make the company truly customer oriented, attain top of the line growth and bottom line results.
- It is a formal, systematic approach to compete and grow, based on delivering customer value.
- In implementing CVM, how a customer perceives the company and obtains value should be identified and managed.
- If employed correctly it can help a business enterprise create and sustain differentiating value.
- The implementation of CVM begins with the company identifying the needs/wants of their customers and building on specific capabilities and business practices to fulfil these needs/wants.
- CVM is thus a top down approach.
- Customer Value Management is a methodical approach that enables a company to fulfil its vision of becoming a premier service provider to its target customers.
- This can be applied at the level of an individual service or on an organization wide basis.
- CVM is an ongoing process:
a)to monitor changing needs of target segment
b)to monitor changing customer perceptions of company’s performance
c)to exchange business improvements
d)to monitor and measure results.
- Process of developing and implementing effective CVM strategies:
- The process of developing and implementing effective CVM strategies can be done by various ways like
Tools and techniques
* Internal CVM Review
* Map of customer acquisition, service and delivery processes
* Employee perceptions of where and how they add customer value
Review Consolidated Findings
* Identify major business processes and products/services valued highest by customers.
* Present gaps between employee and customer value perceptions.
* Identify strategic market segments and competitive positioning of your products/ services.
CVM Plan Implementation
* Phase-in required organizational alignment changes.
* Conduct Customer Relationship Management (CRM) and CVM employee training.
* Implement customer business process and product/service improvements.
* Launch customer marketing and communication program advancements.
* Implement CRM and CVM performance tracking systems.



1.8 LONG TERM IMPLICATIONS OF CVM:-

- Indian economy has been buoyant and is getting stronger and lucrative with every changing period.
- Indian retail seems to have realized this and making strong strides on its way.
- Indian retail contributes about 10% to GDP and gives employment to 8% of population.
- Higher disposable incomes, the development of modern urban lifestyles and an upsurge in customer awareness has affected buyer behaviour in cities and towns.
- Fueling this fact is the changing demography of the Indian populace.
- The percentage of young people in the country is increasing.
- It portends well for the retail business as it is the young people who buy more than the old.
- Again the percentage of women in the population is showing an increasing trend.
- This again is good news for the retail market as women are more avid shoppers compared to men.
- The spread of the visual media is contributing its might in spreading visibility of various customer goods to the public which heighten their aspirations to consume more and to shop in more congenial and luxurious environment.
- The increasing number of double income family who have more disposable income is another contributing factor for this phenomenon.
- Industry experts predict that the next phase of growth in the retail sector will emerge from the rural markets.
- By 2012 the rural retail market is projected to have a total of more than 50 per cent market share.
- The total number of shopping malls is expected to expand at a compound annual growth rate of over 18.9 per cent by 2015.
- According to market research report by RNCOS the Indian organized retail market is estimated to reach US$ 50 billion by 2011.
- Thus in the Indian context, long term implications of CVM would ascertain acquiring the right customer as well as retaining the right customer by enhancing understanding of the prospect and customer base of any company.
- It will also entail understanding the drivers of customer value for various new segments such as the rural customer.
- Another long term implication of CVM is observed in the context of bringing in more and more localization both for the product and promotions.
- Since India is a diverse country, it presents multiple opportunities for localization.
- The diversity is on acount of climatic conditions, culture, lifestyles and standard of living.
- Every state is different from the other and so are the tastes and preferences of the people residing in them.
- An important development in today’s business practice is the increasing number of channels used by firms and customers.
- The introduction of channels, such as the Internet and mobile commerce, has created tremendous opportunities for firms to be in touch with their customers.
- For firms it is essential to develop a multi-channel strategy that fits customer’s needs and optimizes the value offerings to the customer.
- This can be studied in detail for all major segments of the company.
- Moreover, with the Indian Government’s move to allow foreign companies to completely own single brand retail stores in the country, global retail chains such as Walmart, Tesco and Carrefour will open their stores in India.
- This will further intensify completion on the retail space.
- For the Indian customer, it will signal more choice and access to more foreign brands on the Indian soil.



1.9 EMERGENCE OF RURAL CUSTOMERS:-

- With the high speed growth, Indian retail industry is enjoying the taste of success.
- There are several retail chains like Tata’s Westside, Pantaloon’s Big Bazaar and Rahejas’ Shoppers Stop etc which are tapping the huge potential of the economy.
- Few global players are also in the list for instance, McDonald’s and Benetton and few are still trying to share their experience and try their luck in Indian vast potential market such as Marks and Spencer and Mango.
- They are all functioning under one roof in mega malls such as Lifestyle, Fun Republic and Big Bazaar. Initially, large number of retail outlets in India were, in a way, grocery shop.
- This pattern had been changing in recent years, in urban and rural markets.
- India has a large rural population forming an expanded potential untapped market and retailers realised this.
- For them it is a new area of growth.
- Few supermarket chains, for instance, TATA and ITC are now focussing on rural customers.
- ITC launched the country’s first rural mall ‘Chaupal Sagar’, offering a diverse product range from FMCG to electronic appliances to automobiles, attempting to provide farmers a one-stop destination for all of their needs.
- Besides,Godrej and DCM Shriram Consolidated are launching `one-stop shops’ for farmers and their communities.
- Few other examples are Godrej Agrovet, Aadhar stores.
- The Hariyali Kisaan Bazaar Chain, a one stop shop cater to a variety of farmers needs by providing access to retail banking, LPG outlets and even a motorcycle showroom.
- Organised retail sectors like Reliance fresh and Metro is bringing revolutionary change in rural India.
- With Wal-Mart famous for its ‘Always Low Prices’ coming in India with Bharati as equal partner, Indian farmers and rural craftsmen can hope for a better direct deal.
- Retailing does not benefit just the customer.
- It can give huge benefits to other industries, to government, and to the entire economy.
- Hence we see that marketers are trying to grab this untapped market but still the reach of those players is meagre and they should be more focused and rural oriented.
- In a survey conducted by retail industry, it is found out that India’s rural retail market is expected to grow by 29 percent to 1.8 trillion rupees by 2012 helped by rising incomes and changing consumption patterns.
- Rural retail includes fast moving consumer goods, durables, agricultural inputs and autos like tractors.
- According to a report released by the Confederation of Indian Industry and Yes Bank , in India rural per capita income would double to 14,000 rupees by 2012 as more families switch to commercial from subsistence farming, a big enough jump to spur demand for a wider range of products.
- Village households are expected to rise to more than around 150 million in years to come.
- This will probably make rural India the largest potential market in the world.
- Corporate are increasingly eyeing rural areas as drivers of future growth.
- However, this journey is not without hindrances.
- Poor infrastructure, supply chain inefficiency, and product pricing still need to be address properly.



1.10 SUMMARY OF THIS CHAPTER:-

- In order to understand the concept of CVM, it is vital to know what are the various dimensions of customer value and how can CVM be implemented through various stages of the process.
- Furthermore companies have to effectively manage the determinants of customer value with special reference to the retail setting .
- The long term implications of CVM are clearly poised in the right customer acquisition and retention through managing the emerging segments as also optimizing the various communication channels used extensively by the customer.
- Customer Value Management thus provides the guidelines to acquire, develop and retain valuable customers of the business.
- For this the mangers have to put in lots of efforts.
- They must have to develop the analytical capability to understand their customers and value their individuality.
- This indeed, will reap the sustained and increased profitable relationship, which is the most crucial asset to the business.
- This effort will bring increased revenue from its customer base.



1.11 VERY VERY IMPORTANT QUESTIONS:-

1. Explain the concept, importance and benefits of CVM.
2. Discuss the determinants of CVM.
3. Describe the CVM implementation process.
4. Discuss the factors that influence customer value generation.
5. Discuss the long term implications of CVM.
6. Explain the process of institutionalising customer value philosophy. 7. What is CVM? How can it be institutionalised in a business firm?
8. Explain the 3 Rs of Customer Value management cycle.
9. “Choosing right customer is the first step to Customer value management”. Comment.
10. Why is customer retention cost effective? Give instances from your experience.
11. Explain the benefits of CVM to a company.
12. What is the process of determining customer value ? Explain with suitable example.

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