Question

1. Write a complete essay about the Customer Equity Concept (Value Equity, Brand Equity, and Relationship Equity and their drivers) developed by Rust, Zeithaml, and Lemon.

Answer 1

There are many questions that revolve around the Customers Equity which clarifies the concept of it.

Customer Equity Concept: It is a firm's all customers discounted lifetime value, which allows these firms to trade-off between customer value, brand equity and customers relationship management.

Customer equity concept is the new approach to the corporate strategy which keeps the customers at the centre of the organisations objective, thus gives a new era in the development of the relationships between firms and customers.

Value equity: Value equity is a main part of the customer's relationships with the firm. If what we are giving to customers(products & services) dosen't meet customer's requirement, our best brand strategy & customers retention and relationship strategy won't help it. It is driven by perceptions of what is given up and what is received. Thus the value that we are providing is very much important.

Brand Equity: Brand equity is made by the image and what it conveys through it. It basically, serves three crucial roles:

(i). It attracts new customers just like a powerful magnet to the firm.

(ii). It also work as a reminder to customers which reminds them about the new products & services offered.

(iii). It can help become customer's emotional tie to the firm.

Apart from all, awareness about the brand and attitude towards brand is the most important tool towards the success of the brand. brand awareness is considered as influenced by the firms that can help create awareness among potential customer groups.

Relationship Equity: A strong brand equity and a good value equity alone is not enough to attract new customers for a long-term, it needs to build a strong relationship between the firm and its potential customers so that it can help the firm in long run repetitive business model.

Relationship equity is the way to keep a healthy relationships with potential customers. The key tools which can help firms to keep customers entact with the firm for a long run is the loyalty programs and other programs that benefit both the firms and the custoemrs in long as well as short run.

Key drivers to Customer Equity concept: the key drivers for the value equity is when their is a discernible difference between competing products.

It will be most important when doing complex purchasing process.

It will be most important for business to business processes.

Now the key drivers for Brand equity is the low involvement purchases with simple decision process.

It is important when customers use of product is highly visible to others.

Another driver is when experiences attached to the products are passed through generations.

The key driver for relationship equity is when the community associated with the product is as important as the product or service itself.

When the firms are having a learning relationships with the customers then it will become as the another key driver for the relationship equity.