A NOVEL FRAMEWORK FOR MODELING VALUE FOR THE CUSTOMER, AN ESSAY ON NEGOTIATIONby SUSANA NICOLA, EDUARDA PINTO FERREIRA, J. J. PINTO FERREIRA

Int. J. Info. Tech. Dec. Mak.

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Year
2012
DOI
10.1142/S0219622012500162
Subject
Computer Science (miscellaneous)

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Text

ANOVEL FRAMEWORK FORMODELING VALUE FOR THE

CUSTOMER, AN ESSAY ON NEGOTIATION

SUSANA NICOLA* and EDUARDA PINTO FERREIRA†

Mathematic Department, ISEP  Porto Polytechnic School of Engineering

Porto, Portugal

GECAD  Knowledge Engineering and Decision Support Research Center

Porto, Portugal

Rua Dr. Antonio Bernardino de Almeida, 431, 4200-072 Porto, Portugal *sca@isep.ipp.pt †epf@isep.ipp.pt

J. J. PINTO FERREIRA

Universidade do Porto, Faculdade de Engenharia/DEIG

INESC Porto/UITT, Porto, Portugal

Rua Dr. Roberto Frias, 4200-465 Porto, Portugal jjpf@fe.up.pt

This paper proposes a novel framework for modeling the Value for the Customer, the so-called

Conceptual Model for Decomposing Value for the Customer (CMDVC). This conceptual model is ¯rst validated through an exploratory case study where the authors validate both the proposed constructs of the model and their relations. In a second step the authors propose a mathematical formulation for the CMDVC as well as a computational method. This has enabled the ¯nal quantitative discussion of how the CMDVC can be applied and used in the enterprise environment, and the ¯nal validation by the people in the enterprise. Along this research, we were able to con¯rm that the results of this novel quantitative approach to model the Value for the Customer is consistent with the company's empirical experience. The paper further discusses the merits and limitations of this approach, proposing that the model is likely to bring value to support not only the contract preparation at an Ex-Ante Negotiation Phase, as demonstrated, but also along the actual negotiation process, as ¯nally con¯rmed by an enterprise testimonial.

Keywords: Customer perceived value; modeling value; collaborative network; value network; negotiation. 1. Introduction

Any business activity is intrinsically about value exchange. It is about delivering some tangible and intangible good or service and having its value accepted and rewarded by one's peer/customer, either within or outside one's company. Value has been de¯ned in di®erent theoretical contexts as need, desire, interest, standard/ criteria, beliefs, attitudes, and preferences. Value is, therefore, very dependent on perception. Many researchers have studied customer perceived value from di®erent perspectives. Some have studied the in°uence of customer perceived value on loyalty1;

International Journal of Information Technology & Decision Making

Vol. 11, No. 3 (2012) 661703 °c World Scienti¯c Publishing Company

DOI: 10.1142/S0219622012500162 661

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TY o n 04 /2 6/ 15 . F or p er so na l u se o nl y. others have studied the in°uence of perceived value on customer satisfaction14; still others follow Zeithaml's approach,2 in line with Lapierre,3 who studied customer perceived value in an industrial context, dividing this into bene¯ts and sacri¯ces.

In this context, it is our objective to provide ¯rms with a model that builds the bridge between Value for the Customer,4 customer perception of value and enterprise usage and building of both tangible and/or intangible assets that can be either internal or external to business unit under analysis.

This model comprises the understanding that time has a direct impact on customer perceived value, and that the suppliers' and customers' perceptions change from the pre-purchase to the post-purchase phases.4 We therefore break down every value component, as well as every built-and-used asset, into their endogenous and exogenous perspectives along di®erent time positions.

The research presented in this paper combines results from three distinct areas areas: (a) from the Marketing area, the concept of Value for the Customer4; (b) from the collaborative networks area, the ARCON Reference Model for Collaborative

Organizations Networks5; (c) from the Intellectual Capital area, the concept of \Value Network", introduced by Ref. 6 whose purpose can be summarized in her own words,7,8 as \How do we convert intangible assets such as human knowledge, internal structures, ways of working, reputation, and business relationships into negotiable forms of value?" In this context, this paper derives the so-called Conceptual Model for Decomposing Value for the Customer (CMDVC) and its mathematical formulation in the context of an exploratory case study.9 The paper further illustrates the usage of this Conceptual Model in the preparation of a contract in a pre-negotiation setting. It concludes with the application of the formal mathematical model of the

CMDVC using the Fuzzy AHP (analytical hierarchical process) method in the context of the case study and the ¯nal discussion of the results. 2. A Novel Framework for Modeling Value 2.1. Literature review

Customer Perceived Value

Long lasting relationships can help supplier and customer in the process of creating higher value that can be mutually bene¯cial. In business markets, few ¯rms have the knowledge to assess value, and therefore need to understand how this is decomposed into its components and \what drivers create value for the customer"(see Ref. 3, p. 122) in order to obtain an equitable return for the value they deliver to the customer. Moreover, customers' \purchase decisions are often guided by a careful assessment of what bene¯ts they obtain in exchange" (see Ref. 3, p. 123) such as expenses in acquiring and consuming products/services and costs of ownership.

From the point of view both of customer and supplier, it is essential to know how to create and deliver value in the relationship, \particularly as the product itself may end up becoming a commodity (see Ref. 10, p. 594). 662 S. Nicola, E. P. Ferreira & J. J. P. Ferreira

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