Concept of customer value

 Concept of customer value

Introduction-

• Adopt all rapid changes in business environment.

• Each place or position is replaceable.(Nokia to Samsung)

• Leading edge companies are giving importance to customer satisfaction, loyalty, and value.

Definition of customer value

• According to Woodruff (1997)- “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 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, physical cost, and energy cost.

Types of Customer's Value

1. Funtional Value-

• Product is useful, has desired characteristics, and performs a desired function.

1. Appropriate features and characteristics- Quality, Aesthetics, Creativity, and Customization

2. Appropriate Performance- Performance quality, reliability, and service-support outcomes

3. Appropriate Outcomes- Effectiveness, Operational Benefits, and Environmental Benefits.

      B. Experiemental Value-

• Product create appropriate feelings, experiences and emotions for the customer.

      C. Symbolic or Expressive Value-

• 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.