Marketing occurs within an organisation when consumers needs, wants and demands are met with the exchange of a product (Kotler & Armstrong, 1991). The concept is organisation wide, and particularly important when new products are introduced within a market. Customer value is an important aspect of marketing, as it aids in exploring what the consumers perceived needs and wants are. Customer value can be defined as the benefits gained, and sacrifices made in order to purchase a product. The main sources of value created by the organisation are functional/instrumental value, experiential/hedonic value, symbolic/expressive value and cost/sacrifice value. In this paper we will be looking towards the fore coming Apple Watch as an example.
Marketing is an extremely broad concept. Therefore when attempting to define the term, the diverse meanings it has for many different people and groups must be acknowledged. (Kotler, Shaw, FitzRoy, Chandler, 1983). The term at its core relates to much more than just the selling and advertising of products. The desired aim is for products or services to be revealed in a stimulating manner for both indirect and direct customers of the organisation. The common misconception of the term “marketing” is that its core element is to simply sell a product or service. However, marketing as a business philosophy is adopted throughout the whole organisation, and through all levels of management (Keelson, 2012). It is an approach where the customers’ wants and needs must be the primary concern throughout all business decisions.
Kotler et al (1983) explores the term further by arguing that marketing is the process of using activities and institutions that enable communication, deliverance and the exchange of offerings that provide value for a wide array of customers, as well as society at large. Marketing has some fundamental notions attached to it – the first and foremost being human needs, relating to people feeling deprived by not possessing goods or services (Kotler & Armstrong, 1991). Human needs are intricate and come in abundance, and from these perceived needs human wants are established. Human wants are largely dependent on the needs of humans, as they are molded by individual cultures and development (Kotler & Armstrong, 1991).
Once an individual desires a product and has the capacity to purchase it, these wants are converted to demands. Most importantly within the process is the exchange, observed as the underlying principle of marketing (Woodall, 2004). Relating to procurement, acquiring the favourable product from a person whilst offering something in return. A product is essentially anything offered to the market in order to satisfy their perceived needs and wants (Kotler & Armstrong, 1991).
In this case the Apple Watch will be discussed. The product or service will be directed at a specific market, which comprises all potential and actual buyers (Kotler et al, 1983). The Apple Watch is being targeted at the general public, but more specifically a hyper focus towards previously established Apple users and fans with a propensity for superior goods. These notions are important components of marketing as they provide information for the organisation to determine what goods and services to offer.
Marketing is hugely important to any organisation, regardless of size or type of product and service on offer. The aim of undergoing marketing is to deliver a standard of living to people, providing them with products for when and where they need them (Kotler et al, 1983). The concept of marketing is more often than not propelled by revenue; businesses want to add to their profits by satisfying customer needs. Without properly executed marketing functions in place, where the customers needs, wants, and demands are not aligned within the transaction, then the organisation has little chance of achieving a competitive advantage, as well as gaining value for themselves. (Keelson, 2012). Using the example of the Apple watch, which has been in production for some time, Apple have been assembling their ideas, whilst observing the results of other rival companies releasing similar versions of the product. Apple have been carefully honing in on the customers needs and wants, and are finally ready to release the end product to expectedly enthusiastic consumers.
Customer value essentially is the perceived benefits concluded by the customer, derived from obtaining the product held up against the sacrifices being made to acquire the product (Weinstein, 2012). Organisations creating value, furthermore customer value is progressively being seen as a fresh and up to date source of competitive advantage (Woodruff, 1997). Because of this, the creation of customer value is an incredibly significant central concept within marketing (Patterson & Spreng, 1997).
However there is not one single agreed upon definition that may be used for customer value, as well as no distinct definitive theory or framework used to emphasize customer value (Weinstein, 2012). Adopting the way in which organisations are able to create value, Smith and Colgate (2007), have developed an innovative framework where four types of value created merely by the organisation are acknowledged – these being functional/instrumental value, experiential/hedonic value, symbolic/expressive value and cost/sacrifice value.
Functional and instrumental value refers to the buyer purchasing the product and having it complete the function it is designed to do (Smith & Colgate, 2007). More so concerned with the product’s attributes, performance and outcomes. In order for the Apple watch to attain this value, the smart watch has to possess all features including accurate time, Wi-Fi, and user-to-user connectivity in a way that is easy to operate and understand, as well as reliable for the consumer. This assessment of value may vary between individuals. The experiential / hedonic value is more removed from the product itself, and more related to the sensations we receive from the product.
More specifically linked to the feelings and emotions we receive, as well as suitable experiences for the customer (Weinstein, 2012). Tim Cook, the CEO of Apple has titled the Apple watch as the most personal and intimate product yet (Apple, 2015), with the watch alerting you of notifications through a small vibration to your skin. Continuing with sensory value within the watch, Apple have worked with high fashion designers and stylists to ensure the product looks great, as well as releasing a wide array of styles suitable for anyone. Furthermore, the smart watch being one of Apple’s most aesthetically pleasing products to date, it is believed that consumers will purchase due to pleasure of possessing it (CNET, 2015). This sense of joy and experience holds emotional value for the buyer.
Symbolic and expressive value is duly concentrated on the degree in which the customer will bestow or associate psychological meaning to a specific product. Moreover in terms of self-identity, and whether the product enables the buyer to express their personalities, as well as attaching social meaning (Smith & Colgate, 2007). There are a large variety of Apple watches that may be purchased with differing prices and styles. This gives the buyer plenty of choice, and an ability to express themselves in terms of design in colours, shape of watch, and wristbands. Addressing self-worth and self-identity, aforementioned the watch comes in many styles with different price tags, the 18 carrot gold apple watch could appeal to a person wanting to symbolize prestige, and status, and therefore make the buyer feel good about themselves. However personal meaning is incredibly specific to individuals, and for marketers this can be very difficult to achieve.
The cost and sacrifice value related to the things we give up in order to obtain the product, involving time, money, personal investments and the risks involved (Slater & Narver, 1994). Apple has provided a wide array of prices ranging from AU $499 to $24,000 (CNET, 2015), meaning that people are able to choose the dollar amount they pay. As this is Apple’s first attempt at marketing a product designed to be worn, the actual purchase experience will vastly differ. Apple employees have been trained to be much more customer focused, asking questions and making the buyer feel comfortable (Apple, 2015).
However the product has a high level of personal investment, and risks attached to the actual purchase of product. As the watch remains a part of the modern digital electronic world, there is always the chance that technology will revolutionize quickly and the product will be outdated. Moreover along with purchasing the watch, the buyer must have one of the latest versions of the IPhone in order for the device to be compatible, this limits the market of people buying the product. Whilst the Apple watch may carry a lot of symbolic, and expressive value, there are still a lot of risks and costs attached to the product.
The relationship that exists between marketing, and customer value is apparent. Organisations are aware that suitable marketing needs to involve more than just promotional hype. It needs to be intertwined with providing real value to customers. Prior to the actual release of the Apple watch, the brand has been able to find a balance between employing large-scale ads on television as well as high class magazines to gain attention and to conjure interest from the public, whilst still educating consumers on the uncapped features and functions that the watch possesses.
Woodruff (1997) alludes to customer value having long acted as a vital principle within modern day marketing as a means to not only gain customer satisfaction, but brand loyalty as well. Organisations employ different philosophies of marketing as a way to discover what the customers’ needs and wants are, to gain a more complex understanding of what customers’ value (Slater & Narver, 1994). By having an organisation comprehend their specific target markets, the delivery of customers anticipated satisfactions can be completed in a more efficient and effective manner.
In conclusion marketing and customer value are intertwined with each other in terms of achieving organisation success. The consumer’s needs and wants are delivered through an exchange of product that provides real value to the customer. The consumer will then weigh up the product in terms of costs and benefits. The apple watch has perceived customer value, with the product providing symbolic / expressive value, as well as functional / instrumental value to consumers. However as with any product there are still risks associated with purchasing the product, as well as sacrifices having to be made.
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