Customer value is a dynamic interactive phenomenon. Based on a longitudinal, phenomenological study of buyers and sellers in the New Zealand wine industry, we shed light on the phenomena of customers' desired value change (CDVC), driving contextual conditions, and firms' strategic response. A four-stage model of market–CDVC evolution is proposed. Findings identified external and internal drivers of CDVC, such as increasing niche density, changing customer demands, changing competitor actions, and increased competitive rivalry. We were able to track changes in each driver, and identify the related changes in CDVC, including changes in CDVC form and intensity, and the scope of CDVC related actions.
The appropriateness of either transactional or relational strategies is related directly to customers' desired value (Mintzberg, 1994). Webster (2000) proposed that while all marketing strategies contain both transactional and relational elements, the degree of emphasis placed on either depended on the strategic needs of the firm, customers' needs,2 the macro-environment, and competitor moves, findings supported by research into customers' desired value change (CDVC) Flint & Woodruff, 2001 and Flint et al., 2002. As such, an understanding of the drivers of CDVC is critical to the long-term success of business-to-business marketers because it can assist them with building relationships, since value contributes to the development of mutually agreed and understood value systems necessary for the long-term evolution of relationships Flint et al., 2002, Gassenheimer et al., 1998, Möller & Törrönen, 2003 and Sirdeshmukh et al., 2002. Value also plays a mediating role between trust and loyalty (Sirdeshmukh et al., 2002), which are critical components of relationship marketing activity Morgan & Hunt, 1994, Sirdeshmukh et al., 2002 and Zeithaml, 1988. As such, understanding ‘value’ will ensure firms gain tacit competitive advantages over their rivals Hunt, 2000 and Porter, 1980.
An understanding of value from the customer's point of view is critical for long-term organisational success Flint & Woodruff, 2001, Flint et al., 2002 and Payne & Holt, 2001. Woodruff (1997) found that organisations increasingly believed that satisfaction and customer value were directly related to a number of critical market performance measures such as sales, word of mouth support, brand and company loyalty, and profitability. Also, an understanding of the nature of customer value is essential for industrial marketers, if they are to identify and exploit new opportunities, increase customer satisfaction and loyalty, form and maintain long-term relationships with clients, and build brand loyalty Gassenheimer et al., 1998, Morgan & Hunt, 1994, Payne & Holt, 2001, Sirdeshmukh et al., 2002, Woodruff, 1997 and Zeithaml, 1988. Firm financial value, competitive advantage, and long-term success were also related to the ability to create and deliver value for customers Payne & Holt, 2001, Porter, 1980 and Woodruff, 1997.
Despite the alleged importance of value to the customer, the concept has received little attention in the business marketing literature Flint et al., 2002 and Payne & Holt, 2001, while the extant literature on value remains in its infancy Burroughs & Rindfleisch, 2002, Flint et al., 2002 and Zeithaml, 1988. Also, value is dynamic Flint & Woodruff, 2001 and Flint et al., 2002. Firms cannot rely on past sources of value to hold into the future Audia et al., 2000, Hamel & Prahalad, 1994 and Kirzner, 1997. However, there is little research on understanding how and why customers change what they value over time Flint & Woodruff, 2001 and Flint et al., 2002. Research into CDVC has been conducted on small samples, in a narrow context, has not used longitudinal methods to track CDVC, and has yet to examine the strategies used by firms to navigate and adapt to CDVC (Flint et al., 2002). Only limited research has been conducted on CDVC in the context of business-to-business networks (Flint & Woodruff, 2001). As such, Flint et al. (2002) have called for further longitudinal inductive work in this area.
This paper will examine a number of issues. Firstly, how and why does CDVC change over time? Secondly, how do firms tactically respond to changes in CDVC in a business-to-business context? Thirdly, what strategies and structures do firms who successfully navigate CDVC use? This paper is structured as follows. Firstly, a short review of the CDVC literature will be conducted. The Methods section will provide detail on the design and execution of this phenomenological study. Following a presentation of the findings, a Discussion section will examine the three aims of the paper, while the Conclusion section will identify issues for future research.
While researchers note the importance of understanding customer value, research into CDVC remains in its infancy. This research sought to add to this emerging literature, by examining CDVC from a dyadic point of view, using longitudinal methods, and identifying how firms manage CDVC. To this end, this research makes a number of contributions. Firstly, it expands significantly on the work of Flint et al. (2002), by providing support for their findings using data from another industry, examining CDVC from a longitudinal perspective, identifying the means by which sellers managed CDVC over time, and linking CDVC management strategies with performance, as well as the ability to anticipate and meet future CDVC. Secondly, we propose a four-stage model of market evolution–CDVC management that identifies relationships between changes in the environment, the form and intensity of CDVC, the scope of CDVC related actions, and the internal context of the seller's firm. However, further work remains to be done to identify the generalisability of these results. Firstly, further research across a range of industries needs to be conducted. This would involve the use of both quantitative (involving the development of a number of new scales) and qualitative methods that embed studies of CDVC within the wider market context in which firms operate.
