Understanding Customer Value in Marketing
Understanding Customer Value is the most important term in marketing. I call it the V factor. V factor, you already know V is the victory factor and the same is the case in marketing as far as value is concerned.
If you understand value, you will be victorious in marketing for becoming a good marketer.
Here you need to understand what kind of value you are providing to the customers.
How Value relates Marketing?
Let us look at a quotation given by Robert Dolan, he said that marketing is the process by which a foam creates value for its chosen customers.
Thus marketing revolves around value.
If you go through the AMA definition of marketing then also you understand that marketing is all about creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large value.
In marketing is also known as customer perceived value and we also talked in terms of customer value and it is all the same so whether you talk about value, you talk about customer value or you talk about the customer perceived value.
An example of how it works
It is all the same but before I go on explaining the term, let us look at few examples.
You are in the market to buy a smart phone and you have got so many choices you have got Apple, you have got Samsung, you have got Micromax, you have got lava.
So many choices are there now which brand provides more value to you now that is a question.
Let us take one more example, you want to buy a car, you have got choices ranging from Mercedes to afford to a Maruti Suzuki.
Now the question is which provides more value to you.
Now comes the next question if Maruti provides more value to the customer then why does a consumer buy a Mercedes or even BMW or why are you more interested in buying an apple than a Micromax for answering the same.
You need to understand what is value and you need to remember all these companies are successful in the market.
It means they are providing right kind of value to their customers in the market and that is why they are very very successful.
Value is subjective
One more thing you need to understand that value is subjective and these companies are providing value to their segment of customers.
We need to understand what is value. Value is very simple to understand.
Value means benefits versus cost value may be expressed as a straight forward relationship between benefit versus costthat is the perceived benefit and the perceived cost.
Now the ratio between consumers perceived benefits and the resources used to obtain these benefits will define what kind of value is provided by the company.
The benefits maybe economic functional or psychological and resources include the money you pay in rupee or dollar terms and the time and effort you expend in the process of buying.
Qualitative and Quantitative measures
The value in marketing can be defined by both qualitative and quantitative measures.
On the qualitative side, value is the perceived gain composed of individuals emotional mental and physical condition plus various social economic cultural and environment factors.
On the quantitative side, value is the actual gain measured in terms of financial numbers, percentages and dollars or rupees.
That’s why Mercedes or BMW provide value to the customers while the price may be ranging from three lakhs rupees to one crore rupees depending upon the market segments.
These companies are providing value to the customers.
Value is dynamic
One more thing you need to remember value is dynamic in nature.
The value proposition of your product or service may change in accordance with the changes in the competitor’s product or service offerings as the perceived value from the customers perspective may change.
Thus the value creation done by the company is an ongoing process.
The company needs to sustain this process over a period of time then only they can be successful in the market.
That’s why you need to be aware of the market situation and your value is also affected by your competition.
You need to understand the competition better so that the company’s marketing strategy should look at creating the value on a sustainable and continuous basis.
And that’s why it is said that value is created by meeting customer needs.
Thus a foam must define itself not by the product it sells but by the customer benefits provided.
So, now I think you would have understood value better.