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Chapter 2: Lesson 2 Customer Value

This document discusses customer value and how companies can deliver value to customers. It defines customer value as the benefits customers receive from a product or service, compared to the costs and sacrifices required to obtain those benefits. Customer value depends on factors like quality, price, service, and brand image. Companies can provide value by offering reliable low-cost products, high-quality premium products, or exceptional customer service. Delivering superior customer value is important for gaining customers, market share, and profits.

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Wheng Narag
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386 views4 pages

Chapter 2: Lesson 2 Customer Value

This document discusses customer value and how companies can deliver value to customers. It defines customer value as the benefits customers receive from a product or service, compared to the costs and sacrifices required to obtain those benefits. Customer value depends on factors like quality, price, service, and brand image. Companies can provide value by offering reliable low-cost products, high-quality premium products, or exceptional customer service. Delivering superior customer value is important for gaining customers, market share, and profits.

Uploaded by

Wheng Narag
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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CHAPTER 2: LESSON 2

CUSTOMER VALUE

LEARNING OBJECTIVE:

The learners shall be able to explain the value of customers

Customers now have an overwhelming abundance of choice. They are accustomed to


competition, and the fragmentation of the market because of the choices this provides. They
have high expectations and little loyalty to spare if they are not met. Today it is a buyers' market.

This means that companies must try ever harder to create and communicate value in everything
they do. To do that they have to understand what value really is and more importantly, what it is
not

CUSTOMER VALUE DEFINED

People make buying decisions every day. In Every buying decision, a consumer asks the same
question about the worth they will receive and the worth they will give up in order to get a certain
product/service. The gain the consumer receives for the benefit is weighed against the cost the
consumer must pay to acquire the benefit. The value the individual consumer places on a
product or service becomes the customer value for that offering

Customer value is the relationship between benefits and the costs including money, stress, and
time to sacrifice that is necessary to get those benefits. Or simply stated in a mathematical
equation: Benefits-Cost-Customer Value

Customer value is not simply about high quality. It is also not about pricing alone. Customers
value products and services that are of quality they expect and that are sold at prices they are
able and willing to pay In essence, customer value entails extraordinary delivery of four value-
points or components known also as 5SQIP

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1. Service - the intangible value offered to customer

2. Quality - customer perception of how well a company's products and services meet
expectations

3. Image - customer's perception of the company or business they interact with

4. Price- the price a company can command for its products and services and that its
customers are able and willing to pay.

Each of these four components contributes to customers perception of value or definition of


value and affect levels of dissatisfaction or satisfaction with a product, service, or business
Thus, in order to design and deliver superior customer value, each of these components must
be treated with equal attention Importance Service, quality, Image and price are what constitute
customer value In terms of conferred benefits, meeting customer needs, wants, and
expectations and hence affecting and determining customer satisfaction, company
performance market share, competitive advantage, profit, revenue, market position, brand
loyalty, and ultimately company sites and survival Basically, everything that company dos
ultimately funnels into customer value and this translates into the bottom line that is so
important to measuring and defining business success in the globally competitive economy of
the 21st century.

The prices of products and services depend highly on service quality, the quality of the products
and services offered, and the image of the company and the benefits that the products and
services bring to consumers. Organization must remember that consumers are limitless and
delighted in their need and desire for value for their money. Consumers want to experience the
joy of every hard-earned peso they spend on products and services and companies must
understand this as a basic idea in their approach to noting customer needs and wants.

While the value of peso has experienced continuous decline over the past several decades
consumers have a "peso-constant perception" when it comes to value They must feel that the
value of their peso remains the same overtime with the services and products they offer in
terms of service, quality, and satisfaction
Customer value encompasses the total experience of the customer regarding the organization,
its products and services purchase and post-purchase services and customer support, as well
as the overall impact of the interaction between consumer and product, the benefits conferred
and how these affect well-being and are perceived by influential others

This customer value is weighed against the customer values assigned to similar products and
services that provide a similar benefit. Consumers will typically purchase the item with the
highest customer value among all offerings the marketplace

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Every consumer has a unique set of needs and resources on two consumers will place the same
customer value on the same product or service. The highest quality product or service does not
always provide the highest customer value since the benefit of each item is measured against
the count. Some consumers are willing to pay a high price for a quality product or a high level of
service, but others will make the decision that the same benefits are not worth the price

DELIVERING CUSTOMER VALUE

Customers are the lifeblood of all business. They are the source of current profits and the
foundation of future growth.

There are three ways a company can establish customer value to its customer base:

1. Provide the consumer with the best coat Companies can choose to focus their efforts on
providing a reliable product at a reasonable price. The low price helps to increase the value of
their offering to their consumers even if it weighed against a low benefit. For instance, a person
might place a high customer value in a meal at a McDonald's restaurant because he knows he
will receive a consistent satisfactory meal at a low price

2. Provide the consumer at the best product - Companies that offer top quality products
increase the customer value of their offerings to their consumers by providing a high benefit
which exerts the high cost. Lexus, for instance, makes a luxury car that many consumers
consider to be top quality. Lexus, along with other luxury car manufacturers, is able to charge a
premium price for their cars, since they consistently produce cars of this high quality in the
minds of their consumers

3. Provide the consumer with the best service - Companies that provide a high level of service to
their consumers increase the customer value of their services by providing a high benefit which
exceeds the cost for many consumers. Consumers who buy from these companies are willing
to pay more to be treated with exceptional service. The retailer Nordstrom, for instance, has
legendary customer service that is unmatched in the retail industry. Nordstrom employees are
provided great lengths in order to keep existing customers happy and forge relationships with
new customers The Company gives employees the autonomy to make their own decisions
instead of having to send questions up the ubiquitous corporate flagpole.

IMPORTANCE OF CUSTOMER VALUE

The strategic and overall importance of customer value can be summarized in ten salient points
made by Professor Art Weinstein in his book Superior Customer Value: Strategies for Winning
and Retaining Customers in Edition 2012

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