Article ReviewRead and analyze the following article, which can be accessed by clicking the link below.Breur, T. (2006). The importance of focus for generating customer value. Journal of Financial Se

The importance of focus for generating customer value

Abstract A carefully chosen customer value proposition (CVP) is essential to create customer value. Both value creation from the customer and the corporate viewpoint gain from consistent and deliberate focus on key market segments and core competences. The result is a mutual exchange of value, thus stabilizing and strengthening the competitive position in the market. Conversely, failure to maintain a consistent focus puts value creation at risk, and potentially causes one’s competitive position to break down. System Theory offers a useful framework to integrate value creation from both the customer and the corporate perspective. Journal of Financial Services Marketing (2006) 11, 64 – 71. doi: 10.1057/palgrave.fsm.4760001 Keywords Customer value, target marketing, system theory, market segmentation, CRM, customer lifecycle management , shareholder value , customer value proposition

INTRODUCTION The term ‘customer value ’is typically used in one of two ways. Either it is used to denote the value a customer gets from using a product, or it is taken to mean the profit a customer is generating for the company. In parallel, the business literature has two strands. One is considered a ‘soft’ , and the other a ‘ hard ’approach to value creation. The soft approach seems to deal just with how to please the customer. The hard approach deals with the creation of shareholder value. In this paper, the author will take a holistic view, embracing both the soft and the hard approach to value creation. System Theory provides a framework in which both value for and from the customer can be studied and integrated. It also provides a powerful model to deal with the complexity and intricate interdependencies of real world problems. System Theory enables the presentation of these causal dynamics in a simple yet comprehensive way. It is somewhat of a paradox to consider the value for the customer as if this were opposed to the value for the company. There really should not appear to be a conflict of interest between value for and value from the customer, since this is not a zero sum game. A customer that is getting excellent service (that is, getting a lot of value) is therefore less likely to shop around, compare prices and maybe even churn. Good service and satisfied customers are needed to avoid a product being perceived as ‘merely’ a commodity and to command a premium price. This then comes back to enhance the profitability of a customer and thereby accelerates the creation of shareholder value.