Skip to main content

Marketing Notes - Customer Value Concept

Question - What do you mean by the concept of customer value?

Answer
Introduction
We are living in a world that is most unstable and dynamic. World is not only changing but the rate of change is accelerating. We are experiencing change in our daily life and in marketplace too. Customer needs, wants, expectations are changing more rapidly; customers are increasingly demanding better quality and reliability in products and services; new products and services are coming to market more quickly, competition is getting more intense and global; and technology is changing rapidly.

Businesses are operating in an uncertain, highly competitive, and highly complex environment. Not only small but big players are also facing difficulties and challenges. Top companies are loosing market share and new companies are taking their place. In cell-phone industry Nokia was the market leader, but it is not so today, Samsung took its place.

Today, the leading edge companies are giving importance to customer satisfaction, loyalty, and value. They are providing higher customer value to attract new customers and retain existing customers and it leads to  their long term profitability and growth.

Definition of Customer Value
According to Woodruff (1997, p. 142) - Customer value is a customer’s perceived preference for and evaluation of those product attributes, attribute performances, and consequences arising from use that facilitate (or block) achieving the customer’s goals and purposes in use situations".

Customer value is the difference between the values the customer gains from owning and using a product and  the cost of obtaining the product. 

Customer value is the difference between total customer value and total customer cost. Total customer value is the sum of product value, service value, personnel value, and image value. Total customer cost is the sum of monetary cost, time cost, physics cost, and energy cost.

Types of Value
Functional Value
It is concerned with the extent to which a product is useful, has desired characteristics, and performs a desired function.
  • Appropriate features and characteristics - quality, aesthetics, creativity, and customization.
  • Appropriate performance - performance quality, reliability, and service-support outcomes.
  • Appropriate outcomes - effectiveness, operational benefits, and environmental benefits.
For example - Apple focus mainly on creating appropriate features and attributes. Ford focus on performance, and Pfizer focus on appropriate outcomes and consequences.

Experimental Value
It is concerned with the extent to which a product creates appropriate feelings, experiences  and emotions for the customer. For example - most restaurants focus on sensory values like aesthetics, aromas, ambiance, feel or tone. Organizations in travel or entertainment focus on creating emotional values like - pleasure, fun, excitement  adventure, or humour.

Symbolic or Expressive Value
It is concerned with the extent to which customers associate psychological meaning to a product. Some products appeal to customer's self-concept and self-worth. Branded products like BMW, Rolex, etc are purchased because of their status, prestige, and image.

Popular posts from this blog

Functions of Human Resource Management

Question - What do you mean by Human Resource Management? Explain various functions of Human Resource Management. Answer Meaning of Human Resource Management Human Resource Management is a management function concerned with hiring, motivating, and maintaining the workforce in an organization. Human resource management deals with issues related to employees such as hiring, training, development, compensation, motivation, communication, and administration. Human resource management ensures the satisfaction of employees and the maximum contribution of employees to the achievement of organizational objectives. According to Armstrong (1997) , Human Resource Management can be defined as “a strategic approach to acquiring, developing, managing, motivating and gaining the commitment of the organization’s key resource – the people who work in and for it.” Functions of Human Resource Management Human Resource Management functions can be classified into the following

MBA Notes - Nature and Scope of Marketing

Question - Define marketing and explain the nature and scope of marketing.

Marketing Management Notes

The purpose of the MBA Marketing Management Subject is to develop an understanding of the underlying concepts, strategies, and issues involved in the marketing of products and services.  Marketing Management contains five modules: Marketing Concepts and Challenges; Marketing Planning and Control; Marketing Mix, Understanding Customer, and Marketing Information System; and Marketing Strategies. It explores the following topics in detail; Social Marketing, Marketing Mix, Customer Value, Competitor Analysis, Consumer Behaviour, Demand Forecasting, Market Segmentation, Targeting, and Positioning. Module I: Marketing Concepts & Challenges Nature and Scope of Marketing Management , Definition and Meaning of Marketing, Nature and Scope of Marketing, Marketing Process, Marketing Environment, Marketing Organisations, Marketing Challenges, Concept of Green Marketing, Concept of Social Marketing, Concept of Alliance Marketing,   Marketing Mix . Module II: Marketing P