CREATING VALUE FOR CUSTOMERS

Lesson Recording

© 2018 Singapore University of Social Sciences. All rights reserved.

Introduction

• Organizations must focus on customer centricity and deliver services beyond

customer expectation.
• Desired value is what customer’ desire in a product or service that they have
paid for.
• Perceived value is the additional benefits that the customers think they have
received from the company after purchasing a product/service.
• Organizations must be able to create their value propositions by continuously
improving their business processes or focusing on innovations.
• Firms also need to co-create value with customers and build long-term
customer relationships.

© 2018 Singapore University of Social Sciences. All rights reserved.

 Chapter 2: Marketing Concepts

• Marketing is the management process of creating, communicating, and

exchanging relationships with customers.
• The 4Ps of marketing mix are Product, Price, Promotion and Place.
• Marketing mix aims to get the right product/s, to the right customers, in the
right place/s at the right price/s.
• Five marketing concepts are production concepts, product concept, selling
concept, marketing concept and societal marketing concept.
• These five marketing concepts show that there is a shift from product focus to
customer and now societal focus.

© 2018 Singapore University of Social Sciences. All rights reserved.

Chapter 3: Data Analysis for Decision-Making

• Organizations today possess a lot of data from their daily operations in various
departments and customers’ transactional data from point of sale.
• The following features are part of the data analysis process:
– Descriptive statistics
– Histogram/Frequency table
– Data visualization
– Linear regressions
– Looking up data and values

© 2018 Singapore University of Social Sciences. All rights reserved.

 Example Illustration

Student name Mathematics Score Physics Descriptive Analysis Mathematics Score Physics Score

Score Mean/Average 62.2 52.6

Median 59.5 50
Alex 64 54
Standard deviation 20.76 18.06
Amy 53 46 Min 34 26

Bobby 78 67 Max 96 80

Carol 68 60
Bin Cumulative Freq for Cumulative Freq for
Catherine 34 26 Mathematics score Physics score
0 0 0
David 89 75
41 2 2

Evelyn 46 42 51 3 5
61 5 7
George 96 80
71 7 8

Kin Lain 39 30 81 8 10
91 9 10
Lucas 55 46 100 10 10

© 2018 Singapore University of Social Sciences. All rights reserved.

Excel Formula and Illustration

© 2018 Singapore University of Social Sciences. All rights reserved.

 Case: Echo Office Supply

• Business Problem: How much price should be reduced to prevent en block

customer defection to new competitors.
• Look at EcoOfficeSuplies.xlsm Proto (Worksheet)
• Input: Current price list ($), customer data, projected sales demand for
customers for Widget, Sprocket and Gizmos
• Output: New price list that satisfying all the constraints while maximizing new
revenue
• Concern: aggressive change in competition
To drop the prices, to retain customers
Top 5 customers, drop the price by at least 8%
Reduce the projected revenue from big customer by 9% and 5% for other
customers

© 2018 Singapore University of Social Sciences. All rights reserved.

Excel Functions

• LOOKUP(lookup_value, lookup_vector, result_vector)

• VLOOKUP(lookup_value, table_array, col_index_num, range_lookup)
range_lookup – true: approximate match, false: exact match

© 2018 Singapore University of Social Sciences. All rights reserved.

 Excel Functions

• INDEX(array, row_no, column_no)

– Return the value of element from an array
• MATCH(lookup_value, lookup_array, match_type) Returns the relative position
in an array, Match_type: 1 – Less Than , 0 – exact match, -1 – Greater Than

© 2018 Singapore University of Social Sciences. All rights reserved.

Model Building

• Basic Model (Widgets)

• Spinner Button
 Developer  Insert Form Control
 Right Click  Format Control  Link Cell

 Use VLOOKUP to extract price for any specified purchase quantity

 Use Data Table if you change the quantity
 Data Table (Data  What-if Analysis  Data Table)
 Plot total price against quantity to understand the behaviour

© 2018 Singapore University of Social Sciences. All rights reserved.

 Model Development

 Find the projected sale ($) by each product and total for each customer.
Projected sale = Qty * unit selling price
= D24 * VLOOKUP(D24,$G$5:$J$10,2) = $510,692
 Find the projected sale ($) for five Big customer and other customer and total
revenue now. $14,324,401
 Create a new price list ($) and set the initial value to be the same as the
current price list ($)
 Find the new projected sale ($) using the new price list ($) for each customer
by the products and find the new projected revenue.
(old sale −new project sale)
 Percentage of sale reduction (%) =
old sale

© 2018 Singapore University of Social Sciences. All rights reserved.

Solver

• Objective
 Maximize the revised sale ($13,193,999)
subjected to constraints:
 Revised price <= current price
 Revised price >= 0, volume discount applies
 Percentage of sale reduction (%) for sum of top five customers must be at
least 9%
 Percentage of sale reduction (%) for other customers must be at least 5%
 For individual top five customers, sale reduction must be at least 8%

© 2018 Singapore University of Social Sciences. All rights reserved.

 Summary

• Organizations need to deliver value to customers in order to survive.

• Marketing plays a major role in promoting the products to the target
consumers so that they are aware of the brand, and willing to purchase the
products over its competitors.
• Students also learn how to work with data for better decision making and to
display appropriate graphs and charts.
• We learn how to retrieve the information by using lookup, vlookup or index.
• Solver has been used to find the optimal revenue for the business case.

© 2018 Singapore University of Social Sciences. All rights reserved.

Reflection Questions

• Will a company sell a product below cost price? Illustrate using an example.
• How do you measure the ROI of the marketing expense?
• Does social media play a major role in marketing?
• What is the difference between Goal Seek and Solver?
• Which function lookup, vlookup or index, is the most flexible for data retrieval?

© 2018 Singapore University of Social Sciences. All rights reserved.

 Reference

• Leong, T. Y. and Cheong, M. L. F. (2015). Business Modeling with

Spreadsheets: Problems, Principles and Practice, 3rd edition, McGraw-Hill.
ISBN 978-981-4595-15-5.

© 2018 Singapore University of Social Sciences. All rights reserved.