The Concept of Value Based Marketing

Value Based Marketing

This concept evolved with the extensive focus on market orientation as a culture. Market orientation as per Felton (1959, 55p) is a “corporate state of mind that insists on integration and coordination of all marketing functions in which, in turn are melded with all other corporate functions, for the basic purpose of producing maximum long range profit”. Thus with the evolution of this concept the overall organization was customer centric.

Most of the decisions were based on the fundamental principle of adding value to the customer. Multinational companies have invested heavily in incorporating this culture across departments, from the point of purchasing a Computer for office user to delivering the product to the customer, organizations started to baseline customer.

Customers were delighted of this new change in organizations as the customer became the focal point of organizations with excessive research on means of delighting customers, creating a high bargaining power at customers end.

The master mind Peter Doyle (http://www.amazon.co.uk/Value-Based-Marketing-Strategies-Corporate-Shareholder/dp/0471877271) observed that although customer delight is increasing it did not reflect on the share price movement. Thus Peter Doyle brought out the concept of value based marketing. Value based marketing appreciates the core goal of the existence of any organization which is to maximize the share holders. Thus Peter Doyle brings out the importance of an equilibrium of customer value and share holder value. It is important that organizations should contemplate on adding value to the customer but also each decision made should eventually result in maximizing the share holder value.

I would focus on a ratio of customer profit per share ( Profit per customer/Number of shares). This ratio would give a clear indicator to monitor the implementation of the concept of value based marketing.