Value Creation Based Marketing Management

During the past several years, the acceleration of globalization, the more thorough transformation from seller-dominant market to buyer-dominant market and booming of information technology bring very tough challenges in the new century,* More intensive competition from rivals* Quicker innovation from revolutionists* More diversified demand from customers* More accurate cost from suppliers* More reasonable return evaluation from investorsAll changes require creating value for customer and enterprise evenly in marketing management.As being pointed out in marketing management theory, the basic objective of marketing management is to create value for customer and enterprise evenly. But in daily operation, some marketing people tend to go short cut by adopting some so-called "success secret", which is summarized from some partial experience, to replace the thinking process from basic objective. As a result, they validate the ineffectiveness of those "success secret" in handling those challenges. The new century challenges and the ineffectiveness of success secret require us to go back to the origin of marketing and advocate value creation based marketing management. Value creation based marketing management is to create value for enterprise by creating value for customer and to create value to customer by the means that can add value to enterprise. Our discussion focused on "create value for customer and enterprise evenly". There are 6 chapters in this article,Chapter 1 - Return to value creation based marketing management* Summarized the challenges confronting in this new century and illustrate some confusion caused by so-called marketing success secret. * Highlight the necessity of adopting value creation based marketing management.Chapter 2 - Clarify the essence of value creation* In this chapter, base on the rationale of consumer behavior, developed the concept of core perceived value and core perceived cost, and deducted the basic customer evaluation&selection model in customer buying process.* In the model, customer will select the product with higher perceived value and perceived cost ratio only based on the satisfaction of pre-condition that the core perceived value and core perceived cost had been met.* The following statement about the essence of value creation for enterprise in marketing management has been deducted based on the knowledge of finanial accounting. The essence of value creation for enterprise in marketing management is to bring more net cashflow in the consecutive years and the NPV of these cashflow is more than the marketing expense to trigger this change.Chapter 3 - Modify the measurement of value creation* In this chapter, we reviewed current indicators to measure value creation and drew conclusion that none of these indicators is relevant enough to direct the management of marketing.* Base on knowledge of consumer buying behavior, perceived value and perceived cost ratio has been selected as key indicators in evaluation of customer value creation and product relative position plot as tool to direct marketing decision.* Base on knowledge of financial accounting, the increment of total customer lifetime value has been selected in evaluation of enterprise value creation and customer profile&value as tool to direct marketing decision. Chapter 4 - Implementation of value creation based marketing management* According to the theory framework, which stem from marketing management, consumer buying behavior and financial accounting knowledge, some value creation strategy was introduced.* Customer value creation can be realized through increasing perceived value only, lowering perceived cost only, increasing perceived value and lowering perceived cost, perceived value and perceived cost inceasing or decreasing simultaneously to improve perceived value and perceived cost ratio and customization.Enterprise value creation can be actualized through efficient marketing programme and improve total customer lifetime time value...