CVM - 6.3 - Estimate Economic Value Creation

It is widely accepted in management literature that the key objective of corporate strategy is creating a sustainable competitive advantage, which usually reflects in creating superior economic value. Hence, with the potential exception of nonprofit organizations and some privately held companies, the creation and maximization of shareholder value or market capitalization is a critical managerial concern for every CEO. While many different marketing actions can help create value for customers (e.g., developing superior products, building brand equity through advertising, or setting up a unique distribution structure), the options to extract value are more limited.
Leaving aside purely financial operations (e.g., investing excess cash in financial markets), the only source for profit and ultimately shareholder value creation is a firm’s customers who pay a given price for specific products or services. This makes the concepts of Customer Relationship Management (CRM) and Pricing Strategy and Tactics the critical building blocks of any firm’s value extraction strategy. The purpose of this course is to shed light on these two elements and to provide insights into how firms should profitably manage customers and set prices in ways to ensure an optimal and sustainable level of value extraction. Specifically, this course aims to provide insights on:
What CRM is and what its conceptual foundations are
How to measure the financial attractiveness of different customers
How to manage customers according to their potential for profit
How customer databases help to gain insights into serving customers profitably
How to price products/ services according to the economic value they create
How tactical elements such as cost, competition, and distribution impact pricing
How to measure the price sensitivity of customers and adjust prices over time