University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Marketing, Customer Value, and the Lin
In today’s economy, firms are no longer the center of business. In order to survive, companies need to acknowledge the fact that business now revolves around customers (Keith, 1960). As a result, marketing becomes one of the most prominent philosophies in business. Therefore, to get a better understanding of today’s business, this essay will be discussing about three important concepts. These concepts are marketing as a business philosophy, the understanding of customer value, followed by the link between marketing and customer value. In addition, this essay will be using the Village “Gold Class” Cinema as example of the concepts’ application.
Marketing as a business philosophy has grew astoundingly for the past few decades. It becomes one of the influential subjects that being thoroughly explored in the society. Many have tried to define marketing in different ways. Based on a marketing expert Philip Kotler (1983), marketing is defined as a “human activity directed at satisfying needs and wants through exchange processes” (p. 7). Marketing exists in order to know what the customers wants and what are their needs, and satisfy those wants and needs through transactions. According to Kotler (1983), there are various philosophies that can guide the business conducts exchange and achieves desired outcomes. Using Village “Gold Class” Cinema as example, philosophies that will be discussed here are product philosophy and marketing philosophy.
According to Kotler (1983), product philosophy assumes that customers will choose to buy high quality products, and thus organizations should focus on the product design and its quality. Village “Gold Class” Cinema is an example of product philosophy application in business. In February 1997, Village Cinemas and Warner Bros partnered to open a new type of cinema in Melbourne’s Crown Casino—“Gold Class” cinema (Wikipedia, 2014). This new luxury cinema format was then expanded to other Village Cinemas
throughout Australia and around the world. “Gold Class” Cinema is a premium venue, offering personalized service level with smaller and private cinemas. “Gold Class” Cinema focuses highly on its products’ quality by improving the art projection and its sound systems as well as adding recliner to its seats (Village Roadshow Limited, n.d.). All these new high quality products were prove as how “Gold Class” Cinema highly values the quality of its products.
However, product concept will not be enough for Village Cinema to become successful. The purpose of a cinema is to entertain customers. Yet, entertainment as human’s needs can actually be satisfied by something else such as sport events or music concerts. Thus, Village Cinema needs to apply marketing philosophy to complement the product philosophy.
To understand marketing philosophy, it is important to know the purpose of business in advance. Peter F. Drucker (1999) stated, “there is only one valid definition of business purpose: to create a customer” (p. 35). Marketing concept focuses on identifying what the customer needs, what products can attract customers and how to promote them effectively (Kotler, 1983). By putting marketing philosophy in practice, business can serve what consumers want and will generate greater profit.
Village Cinemas developed the “Gold Class” concept even further in order to “widen the appeal of going to movies” and “attract broader demographic” (Village Roadshow Limited, n.d.). They put marketing philosophy into practice by analyzing what action should be undertaken in order to satisfy the customers’ need of being served. In addition to entertainment, human likes to be given personal service. Thus, Village Cinemas improve the “Gold Class” Cinemas by providing entertainment with high quality products and giving a personalized service at the same time. “Gold Class” Cinemas “boast a full service bar, lounge and gourmet food with personal waiter service during each screening” (Village Cinemas, n.d.). As the pioneer of this concept, Village Cinema has successfully embraced the marketing philosophy where business should focus on the customer and to provide what they want.
Zeithaml (1988, as cited in Smith & Colgate, 2007, p. 8) defined customer value as being “what customers get from the purchase and use of a product versus what they pay.” According to Drucker (1999), customer value determines what the business will produce and whether it will prosper or not. Clearly, customers will prefer to consume the product that offers them most benefits with least costs possible. Based on their researches, Smith and Colgate (2007) proposed four major values of customer that applicable to consumer and to customer value creation strategy. According to Smith and Colgate (2007), functional value is concerned about the purpose and usefulness of a product. Experiential value is concerned with the customers’ feelings created by the product whereas symbolic value is concerned about the psychological meaning of a product to customers. On the other hand, cost is related to the both direct and indirect costs of using the product.
The following table shows customer value creation strategy with Village “Gold Class” Cinema as the example.
/- Movies, sound systems, and seats has high quality
– Given appropriate attributes when necessary (e.g.: 3D
glasses when watching 3D movies)
– All food and beverages menu should be available
– Movie delivered without any disturbance
– Being served with high quality service
– Seat recliner move accordingly
– Ordered food and beverages come correctly and
within appropriate time length.
– Everything function effectively and appropriately as it
– Cinema should be able to entertain and serve the
– Foods and beverages should be able to satisfy
– More specialised and high quality theatre design for
“Gold Class” customers than other normal customers in
order to improve aesthetic value
– Food plating should be appealing
– Foods and beverages should smell and taste good
– The movie watched will bring pleasure and
enjoyment, (fun, excitement, happy, adventurous,
sad, humorous or any other emotional feeling)
– Customers should feel satisfied after being entertained
and served personally
– The design of “Gold Class” theatre have fewer seats
and intimate setting, which could lead to a love bonding
between partners or loved ones
– Friendship and love bonding with families and friends
by watching movie in “Gold Class” cinema together
– Some high quality movies provided by the “Gold
educational movie, fantasy, or any other experiences
depend on the movie genre
Self identity – Staff and system interaction can make customer feel / worth
better about their own selves.
– Personalised service can make customer feel exclusive
– Irreplaceable quality time with family or friends every
week in the cinema
– Customers can express their taste of movie and
preference of way to spend their leisure time
– Customers can gain prestige and status by watching
movie in “Gold Class” Cinema in front of their friends
– The term “Gold Class” itself can boost up the
customer’s image and self esteem when they enter the
special theatre in front of crowd
– As the ticket is expensive, customers will be known as
rich by other, which can make them feel exclusive
– People will think only those with higher disposable
income or rich background can watch in this cinema
– The price of the ticket, food and beverages
– The transportation cost or any other indirect cost
– Some psychological relationship cost such as
attachment or addiction
– Equity conflict for customers who think highly of how
some people can’t afford to enjoy the privilege
– Energy, effort and time spent to queue or click the
order button through internet
– Low personal and operational risk as Village “Gold
Class” Cinema is a well-known brand
– High financial risk as the price is higher than other
LINK BETWEEN MARKETING AND CUSTOMER VALUE
Whatever the market or the business operating at, marketing has one common theme— to ‘create perceived customer value that is superior to alternatives available while at the same time creating value for the business’ (Kotler, Brown, Burton, Deans, & Armstrong. 2010, p. 4). When marketing philosophy is applied in a business, customer value will play a really important role. Creation of the customer value is critical for marketing, especially when the business is going to develop new products and services (Smith & Colgate, 2007). Customer value represents customer point of view, and marketing needs it in order to manage a profitable relationships between business and customers. With marketing philosophy, business needs to know what customers consider important in a product—what customers value in a product—and to develop those products according to customers’ preferences.
Compared to marketing philosophy, customer value doesn’t really influence product philosophy. In this case, business assumes that customers will prefer to buy high quality product with reasonable price, thus marketing effort is not much needed (Kotler, 1983). However, Village “Gold Class” Cinema still considers customers value as critical to their business. Village Cinema didn’t only focus on the product quality, yet they deliver a personalized and high quality service as well in order to satisfy the customers. Village Cinema knows that customers want to be entertained and personally served in the same time. Thus, the importance of customer value was demonstrated by applying marketing philosophy in their business and develop “Gold Class” concept.
To conclude, marketing is highly linked with customer value. Despite having different philosophies, every business should not take customer value lightly if they want to survive in today’s competition. Even if some businesses like Village “Gold Class” Cinema embrace more than one philosophy, they still need to address customer value as a really important concept that can influence their business outcome.
Drucker, P. F. (1999). The Practice of Management. Oxford, London: Butterworth Heinemann.
Keith, R. J. (1960). The Marketing Revolution. Journal of Marketing, 24(3), 35-38. Retrieved from http://www,jstor.org/stable/1248704
Kotler, P. (1983). Marketing and Human Needs. Marketing in Australia (pp. 3-27). Melbourne, VIC: Prentice-Hall of Australia.
Kotler, P., Brown, L., Burton, S., Deans, K., & Armstrong, G. (2010). Marketing (8th ed.). Sydney, NSW: Pearson Australia.
Smith, J. B. & Colgate, M. (2007). Customer Value Creation: A Practical Framework. Journal of Marketing Theory and Practice, 15(1), 7-23. Doi: 10.2753/mtp10696679150101 Village Cinemas. (n. d.) Gold Class. Retrieved from http://villagecinemas.com.au/goldclass Village