What Is the Retail Value Chain?

The customer value chain is a description of the customer's consumption process from the perspective of the customer. The process of customer value acquisition is clearly reflected on the customer value chain through transaction activities and relationship activities. As a customer value chain, consumers also have their own value chains, namely buyer value chains. The customer value chain is proposed by Porter. A company can create the value that buyers need by adopting ways to increase buyer effectiveness or reduce buyer costs. Buyer costs include not only financial costs, but also time or convenience costs. He divided buyers' purchase standards into two types: one is the use standard, which is a specific measure of how the buyer's value is created; the other is the signal standard, which is a measure of how the buyer recognizes the actual value.

Customer value chain

The customer value chain is a description of the customer's consumption process from the perspective of the customer. The process of customer value acquisition is clearly reflected on the customer value chain through transaction activities and relationship activities. As a customer value chain, consumers also have their own value chains, namely buyer value chains.

Five levels to create loyal customers

Porter's buyer value theory reveals the composition of customer value to a certain extent, thereby establishing a direction for the company to create actual value and affect customers' perception of actual value. However, in the company and

The customer value chain decomposes the process of customer value acquisition into several value activities that are separated and interconnected. When customers buy, they are roughly divided into four segments: pre-purchase, purchase, use, and post-purchase. However, for customers, not every segment must be experienced, and each segment is determined by the nature and type of the purchase. The importance also varies. For example, customers of digital printing companies have their value activities terminated after the photo printing is completed. They only go through the pre-purchase and purchase processes. The use and post-purchase processes are not important or do not need this process for them. This type of company's customer value chain can be analyzed separately from the latter two processes. For many service companies, customers are more concerned about the perceived value of the use and post-purchase process.

Each segment of the customer value chain is composed of several value activities. Similarly, companies must find important value activities that affect customer value perception on the value chain. These value activities are the main part of the value chain and are the key to customer value management. In the link, some value activities are not necessary or important to customers. When constructing the customer value chain, these value activities can be eliminated. For small retail businesses operating as stores, customers are usually cash transactions, and the value of the payment activity is not very different across the industry, and the perceived value of customers is low; but for large shopping malls and hypermarkets, customers use cash Payment will extend the checkout time and may cause customers to be upset. Then providing credit card consumption can bring great convenience and improve the value of customers. The value activity of paying for goods in the customer's value chain of these companies is particularly important important.

For the construction of the customer value chain, the company must recognize the important issues to be resolved in each segment of the transaction. Before purchasing, how to determine the product needs, the source of product information, and how to choose a brand are the issues that customers are most concerned about. In response to this need, companies need to solve how to stimulate consumer demand and what communication methods to choose. And look for brand differences; when buying, the experience of the buying process becomes more and more important, and the company must thoroughly study the factors that affect customer purchase decisions (such as the urgency of time, store display, etc.); for the post-purchase and use process, Enterprises should analyze the factors that affect consumer satisfaction and the factors that determine the customer's continued purchase. In this way, based on customer consideration from all aspects, grasp the core factor of marketing, "customer", in order to be invincible in the fierce market competition. Ground.

The connotation of customer value management

Thompsom and Stone pointed out in 1997 that customer value management is to obtain a profitable strategic competitive position, to achieve business capabilities (such as process, organizational structure) and the value chain A coordinated and systematic approach to ensure that current or future target customers can obtain the maximum benefit from the services, processes or relationships provided by the enterprise. This definition indicates that customer value management is based on the creation of customer value, and systematically manages customer value, improves customer loyalty, and ultimately maximizes enterprise value.

More and more companies have realized that customer identification and value acquisition is an ongoing process, not just what happens at the moment of paying money or using a credit card to obtain goods or services. Customer value management requires that the company must conduct a comprehensive and detailed analysis of the entire process of the customer's consumption activities from the time the customer has purchasing needs, and use all opportunities to contact the customer to enhance the perceived value in the customer's mind. The implementation of this process is A difficult and complex systems project.

Enterprise value chain and competitive advantage

In 1985, Professor Michael E Porter of Harvard Business School first introduced the concept of "value chain" in his book "Competitive Advantage". He pointed out that every enterprise is used to conduct Design, production, marketing, delivery, and a collection of activities that assist the product. All these activities can be represented in the value chain. At the same time, he divides the enterprise's value activities into basic activities and auxiliary activities.

If the enterprise as a whole cannot identify the competitive advantage, the value chain will decompose the entire enterprise from the perspective of value creation in an orderly manner, so that the enterprise can clearly see the interrelationship between its various activities that create value. Among the many "value activities" of an enterprise, not every link creates value. The value created by the enterprise actually comes from some specific value activities in the enterprise value chain. These truly value-creating business activities are The "strategic link" of the corporate value chain. The advantages of enterprises in the competition, especially the advantages that can be maintained for a long time, are actually the advantages of the enterprise in some specific strategic value links of the value chain. When these key links are grasped, the entire value chain is also grasped. Enterprise value chain has become a basic tool for determining competitive advantage and creating and maintaining competitive advantage.

Relationship between customer value chain and competitive advantage

Differences in customer value chains are a key source of corporate competitive advantage. Many of the company's activities infiltrate and interact with the activities of some customers, but from the perspective of the enterprise value chain, companies often ignore certain needs of customers. For example, companies that are blindly pursuing sales ignore the customer's after-sales service, which is likely to be the value activity that customers are most concerned about. The customer value chain is a description of the customer's consumption process from the perspective of the customer. The process of customer value acquisition is clearly reflected on the customer value chain through transaction activities and relationship activities. The value chain decomposes these activities into ordered segments, and each segment is It is a collection of a series of value activities. Each value activity is a contact point between customers and the enterprise. These contact points are potential sources of business differentiation. Analyzing and researching these contact points to improve the corresponding value activities makes the enterprise more unique. Or seize key points of contact, integrate important value activities, try to reconstruct unique value chains in new ways, and reshape the company's competitive advantage by enhancing business differentiation.

Customer value chain and customer value management

Customer value chain provides a new frame of reference for customer value management. Customer value management is the coordination and integration of a series of value chain activities such as customer identification and acquisition of value, and continuously improve market strategies to provide superiority over competitors. Value, customer satisfaction and customer loyalty. By analyzing and researching the customer value chain or rethinking and reconstructing the value chain, from the perspective of customers, an accurate and comprehensive analysis of customer consumption psychology, processes, and characteristics can only find the source of business differentiation and inexhaustible driving force for profit growth. Customer value management based on customer value chain should pay attention to the following key issues:

Due to the spillover of knowledge and the constant updating of knowledge, it is impossible to maintain the enterprise's lead by relying on the advantages of products, services or operating processes. In practice, more and more companies have realized that in a highly volatile market, only loyal customer relationships can remain stable. The existence of such relationships has eased the impact of environmental uncertainties on companies, and Customer relationships cannot be copied and replaced. Therefore, customer resources have become scarce resources for enterprises, and establishing and maintaining good customer relationships has become a strategy for enterprises to seek long-term development.

The relationship process of the value chain emphasizes the need to establish long-term relationships rather than short-term transactions between enterprises and customers. For enterprises, it is not enough to just know and understand the customer's satisfaction with the products and services that the company has or is providing, only Based on products and services, further research and understanding of the customer's trust and loyalty to the company's products is of great significance for companies to discover potential customers and needs, maintain existing customers, and increase sales in future markets. Through research and grasp of the customer's trust and loyalty to the company's products, the company can reorganize resources according to customer behavior segmentation, strengthen customer loyalty, and connect customers with the enterprise in the process of exploring potential customers and needs to determine their The business value of the enterprise firmly grasps the most valuable customers, helps the enterprise to better allocate resources, makes the improvement of products and services more effective, increases future market sales, and achieves the greatest degree of profit.

Products are the lifeblood of an enterprise. Developing and owning unique products is a prerequisite for attracting customers and a guarantee for the enterprise market. Especially in a fiercely competitive and homogeneous market environment, marketable products can avoid blind development. Market risk is even more bargaining chips for customers. What are the customer's needs, what are their preferences, and what are the products that they are most concerned about have become the problems that the company strives to discover and tap, it is a corresponding market survey measure made by the enterprise before the purchase process on the customer value chain. The pre-purchase process is an important decision-making process for deciding purchases and forming purchases. Customers have to go through the psychological process of confirming needs, collecting information, evaluating alternatives, and determining choices. The final choice depends on the comparison of the value of each candidate's product and the value gain. The key to product design is whether the company's products are what customers expect, and whether the factors that customers pay attention to can bring value and satisfaction. For example, mobile phone products targeted at young users, companies must know which common value factors these young people pay most attention to, such as stylish appearance, call quality, color and ringtones, or low radiation and easy operation. They must pass market surveys and Statistical analysis draws firm conclusions to guide product design and research and development, and such products will surely be favored and recognized by consumers.

Considering the customer value chain, enterprises should explore different methods to connect with the customer value chain or redefine the value activities of the enterprise in order to better meet the purchase standards. Restructuring the value chain can create opportunities to form significant differences and fundamentally change the opportunity for companies to add value. With the help of information systems, customers can integrate multiple consumption processes together. The role of the information system is more reflected in the process, so that the products or services created can meet the specific needs of customers with unique attributes, and be provided to customers at a cost recognized by customers, and new values can be created. Enterprises can let customers directly participate in the production and distribution of value, and customers can be involved at any stage of the value chain. Second, continuously optimize the value chain. As long as it can support the delivery of excellent customer value, some processes can be outsourced to allow the company to focus on its core business as much as possible, eliminating general business that does not constitute a competitive advantage. For example, a real estate development company entrusts all sales operations to a professional marketing agency to increase product value through specialized marketing operations. Companies can also reorganize basic business processes to meet customer needs.

Nature

In the final analysis, the competitiveness of an enterprise is formed by exerting influence on the customer value chain and creating value for customers. Creating value for customers is reflected in two aspects: reducing customer costs and increasing customer benefits. How to reduce customer costs and increase customer benefits depends on how the company's products (or services) are used by customers, that is, the various possible connections between the enterprise value chain and the customer value chain.

Three points of consensus should be reached between enterprises and customers

The goal is the same ---- the traditional corporate goals and customer goals run counter to each other, one side wants more profits and the other side wants lower prices. As long as the key information is shared between the enterprise and the customer, the relationship between the enterprise and the customer can be changed from "one party benefits and one party is damaged" to a "win-win" relationship that benefits both parties.

Efforts by both parties-Both businesses and customers should realize that for both parties to rejoice, it will take much more effort than usual. Companies need customers to actively participate in all stages of the value chain or business activities, and customers are not just passively paying for things.

Benefit-sharing-Companies and customers should share the value they create, not one side. Sharing does not necessarily mean absolute equality, but it should be fair and reasonable and acceptable to both parties.

Optimize the customer value chain

Through the construction and application of information systems, companies can effectively optimize the customer value chain

As products or services with information (knowledge) as a key component become more and more valuable, the knowledge and opinions created by customer participation have become assets shared by enterprises and customers. For example, the open source code of the Linux system has attracted the participation of many computer enthusiasts around the world, prompting the rapid improvement of Linux performance, and the high-performance operating system has benefited the majority of computer enthusiasts. Dell Computer Company uses the Internet to carry out direct sales, so that customers can get the computer configuration they really need, and Dell has also created the myth of zero inventory production.

Direct customer involvement in the production and distribution of value

With the help of modern information technology, enterprises can directly engage customers in the production and distribution of value. Customers can be involved at any stage of the value chain. Some companies even turn customers into "employees". Italian carmaker Fiat wanted to test the design of its new car Punto, and invited more than 3,000 potential customers to participate in the review and score on the Fiat website. As a result, Fiat acquired target customers' insights on the new car at a very low cost, and designed a car that truly reflected customer preferences. For customers, they also get the cars they really want.

Meet customer needs

Organizations can reorganize basic business processes to meet customer needs. For example, many furniture companies provide customers with furniture that can be disassembled and let customers ship home to install them. This may seem more "troubled" to customers, but some customers are more willing to accept the low cost. And customers can also choose the matching and combination of furniture parts according to their needs or preferences. This is actually a value re-creation process involving customers.

Integrating multiple processes

With the help of information systems, multiple processes such as purchase, use, sales, functional integration, and value re-creation can be integrated. Here, the role of the information system is more reflected in the process, so that the products (or services) created thereby can meet the specific needs of customers with unique attributes and be provided to customers at a cost recognized by customers-new Value can be created. From Dell direct sales computers to Microsoft's free software, from easy upgrades of Gateway computers to easy purchase of Compaq computers, all reflect the general trend of today's enterprises relying on information systems to optimize customer value chains to achieve corporate strategic goals.