Different people have defined marketing differently. On the face of it, it may be thought of as the process by which an organisation reaches out to the consumers with the products or services that it has to offer in order to make profits. If we dwell deeper, it's worth mentioning that marketing strategies have evolved immensely over decades. The organisations in the present day care as much for creating value for customers as they do for increasing their profits. In fact, it has been largely accepted that both these things are interlinked. Modern age marketers are realizing and understanding the importance of creating value for their consumers so as to reap the benefits out of a strong buyer-seller relationship. Gary Armstrong who quotes that “creating customer value and satisfaction are at the very heart of modern marketing thinking and practice” supports this. (Kotler and Armstrong 2000)
The need and importance of creating value has been discussed in the following paragraphs. The ways in which organisations create value for their consumers as well as themselves has also been highlighted with examples from the products and services we use and see in our everyday lives. Also, the role of value creation in today's market and the extent to which it is important have been illustrated with examples from the telecommunications sector, fashion retail sector and the likes.
What exactly does creating value for the customer mean? To understand this better, let us go back to the role of marketing. Marketing strategies basically aim to cater to a particular set of people who are most likely to buy the product or service being offered. This knowledge helps the marketer device ways in which to position the product in the minds of the target audience so as to 'create value' for the product and attach that value to the product (Tom Egelhoff n.d.). The buyer perceives the product as valuable based on several criteria. He buys the product if it fulfills his psychological as well as practical needs. This leads to a value exchange between the buyer and the seller.
One might question the role of creating value for firms assuming that it isn't as important as the value creation for consumers. Value is created for firms when they perform extensive market research into understanding what market they shall cater to, keeping in mind the age group, region, etc. being few of the factors. Also, they need to know the strength of their product or service over other firms offering similar products. It is a widely accepted fact that no business can survive if it doesn't market the right product to the right people. Value creation for firms is essential if they want to have a competitive edge over their rival firms. These days, marketers are coming up with unique marketing techniques of creating value in order to capture wider market as well as drive their competitors away.
Part of creating value includes advertising. Using the combination of market research and product positioning, both of which are creating value, the organisations invest money into advertising. Before the vital steps of marketing, advertising should not be done. According to Tom Egelhoff "marketing matches the product to the right customers that have a need for it. This is the real value of marketing because advertising must always be an investment, never an expense. It must produce more revenue than it costs." (Tom Egelhoff n.d.)
In order to understand how companies create value for consumers, Virgin Media serves as a suitable example. Virgin Media formed in 2006 by the merger of NTL, Telewest and Virgin Mobile UK, came to be the first 'Quadruple Play' media company within the United Kingdom. (Virgin Group of Companies n.d.) It is able to offer high-speed internet...