02 Jul 2020 21:26 IST

The changing face of customer value proposition

Due to Covid, a host of brands are focussing on health in their products or services as strategic differentiators

Ever since the mid 1950s the term ‘Customer Value Proposition’ (CVP) has been central to business management after Peter Drucker laid the foundation with his epochal statements “the only purpose of business is to create a Customer” and “what a customer perceives as value is what is important.’’

A host of value elements such as product usefulness, quality, image, availability, price, total cost of acquisition and service influence a customer’s buying behaviour. There has been little emphasis on health as a value element barring the obvious cases of food and health products. However, in the post Covid era, health considerations appear to have assumed great importance triggering a rush by product manufacturers and service providers to revisit the drawing board and redesign their product or service. Health considerations have not only emerged as a new driver of CVP but health-related infrastructure and facilities are becoming strategic differentiators.

Customer Value Proposition

CVP in products consumed by people is being affected by direct value drivers; whereas indirect value drivers will influence the usage of products or services through process, equipment or facilities.

Direct health value drivers are influencing food consumption of individuals and households as well as that served at restaurants largely through additives acting as immunity boosters and enhancing nutrition.

* Millets popularly termed as nutricereals are nutritionally superior to wheat and rice for carbohydrate and energy, and serve as a good source of protein, high dietary fibre, vitamins, minerals, antioxidants and micronutrients - Finger millet grains contain essential minerals such as calcium (Ca), phosphorus (P) while pearl millet grains contain iron to the extent of 6.4 mg/100 g.

* Herbal medicines and inputs to boost immunity not necessarily against Covid-19 but a host of other ailments as well. For instance, many restaurants are using additives in tea (chai) such as ajwain-saunf, lemongrass and Kashmir khawah to boost immunity against seasonal ailments. The addition of turmeric (haldi) has become widespread and gooseberry, wheat-grass, honey and kokum are fast catching up. New products launched at coffee outlets include honey turmeric latte and vitamin-rich raspberry kiwi.

* Covid-19 has accelerated the shift to organic foods that are free from pesticides and chemicals and the organic food market in India is expected to rise from Rs 1,200 crore Rs 2,000 crore.

While the above are examples of positive health value drivers, decrease of nicotine content in cigarettes that is harmful to the respiratory system, decreases immunity and causes morbidity in smokers would be a negative value driver if there is a legal stipulation in the future.

Indirect health value drivers

The two value drivers that are influencing the design of process and facilities are: (a) fear and mistrust of the outsider and (b) avoidance of human touch both of which are negative value drivers. This may result in giving a new dimension to the age-old social stigma of untouchability which however, thankfully, would be classless.

A paradigm change is sweeping ‘Service Operations’ in hotels/hospitality sector that have been severely impacted by Covid-19. In hotels, contactless check-ins, electrostatic disinfections, and ordering food (room service) using a QR code have been introduced. The beauty & wellness industry provides services that are personal & physical in nature wherein the very basis of spas and salons is touch. If these are to continue to thrive and satisfy the demand from people who still need to “feel good”, the value elements would need modification and salons would need to digitally exhibit their improved health standards – a la ‘hygiene theatre”, like a health-checklist that shows, for instance, when the chair was sanitised last. and use of UV disinfectants for the instruments. Thus, digitisation of health standards and services would enhance customer experience and be a positive indirect health value driver.

Strategic differentiators

In a typical value chain, the primary elements are inbound logistics, operations, outbound logistics, marketing and sales and service; while the supporting activities are procurement, technology development, human resource management and firm infrastructure. While formulating cost leadership or differentiation as a business strategy, companies would now have to re-examine their value chain de novo to ensure concomitant health safety.

For instance, on the operations side, virtual cloud kitchens are (a) employing hi-tech automated equipment for contactless cleaning and sorting of vegetables and IoT devices to track movement of kitchen staff through colour coded caps; (b) packing food in ultraviolet boxes akin to refrigerator storage compartments wherein food can be kept for a short time after delivery to sanitise the packaging surface. To demonstrate safety, they are sharing details of temperature and medical certificates of staff handling food, along with the bill - differentiation through self-certification of health safety process.

Health safety

In other sectors, health safety triggered differentiation will be achieved through contactless supply chains powered by drone delivery and the vast multitude of robots. Robots have already made their mark in automobile factories and medical surgery and are now invading every other segment of manufacturing, logistics, retail, hotels, hospitals, and security.

Robotics powered by Artificial Intelligence(AI) can be installed by hospitals and companies for temperature screening, checking facial masks and ensuring social distancing. Contactless treatment and nursing including collection of swab samples, delivery of food to patient, engaging the patient and initiating video-conferencing with doctor/nurse, is also possible through robots.

Firms’ infrastructure conventionally has included planning, finance and accounting, legal and government affairs. In the changed scenario, health safety infrastructure will become an integral component.

For example, in the future, over and above the infrared guns for temperature measurement, sanitisation tunnel, fogging machine for disinfection, companies may differentiate by procuring ‘implantables’ that can be inserted under the skin to monitor an employee’s vitals-recording 24*7 the temperature, blood pressure, heart rate, blood oxygen, and glucose and thereby promoting health consciousness and safety. Robotic process automation (RPA) for capturing information on thousands of employees regarding their travels, persons they came into contact, illness record to attract talent and satisfy customers will be the next wave of differentiation.

Branding

Health value drivers entail additional costs but serve to favourably influence both customers and employees. From a customer perspective it is an assurance of safety and quality of product or service as adherence to health safety related norms and practices are in future bound to form part of quality specifications and contracts. From the employee perspective, it is an unequivocal statement of values through caring for their wellness and would serve to retain as well as attract talent.

Corporates have been primarily branding themselves through their product or service. Many firms use their HR policies to strengthen their branding. In recent years, corporate governance and CSR practices have also contributed to branding. In the post- Covid era, health-related policies and systems will emerge as an additional driver for branding.

(The writer is Director, NMIMS, Bangalore.)

Recommended for you