how to determine customer value

1. CUSTOMER SATISFACTION
• The most important asset of any organization is its
customers.
• Satisfied customers are the lifeblood of any
organization.
• Product’s perceived performance in delivering value
relative to buyer’s expectations is customer
satisfaction

2. Customer Satisfaction
• It is the person’s feeling of pleasure or
disappointments, resulting from comparing a
product’s perceived performance (outcome), in
relation to his/ her expectations.
 Perceived performance below expectations = dissatisfied customer
 Perceived performance meets expectations = satisfied customer
 Perceived performance exceeds expectations = delighted customer

3. Customer Value
• Also known as Customer Perceived Value.
• It is the difference between the prospective customer’s evaluation of
all the benefits and all the costs of an offering and the perceived
alternatives.
• “The perceived worth of the set of benefits received by a customer in
exchange for the total cost of the offering, taking into consideration
available competitive offerings and pricings.”
• Value is the perception of the benefits associated with a good,
service, or bundle of goods and services (i.e., the customer benefit
package) in relation to what buyers are willing to pay for them.

4. 4
Customer looks for Value
•Value = Benefit / Cost
•Benefit = Functional Benefit + Emotional
Benefit
•Cost = Monetary Cost + Time Cost +
Energy Cost + Psychic Cost

5. Customer Perceived Value
Total Customer Value/
Benefits
Product Value
Service Value
Personnel Value
Image Value
Total Customer Costs
Monetary Cost
Time Cost
Energy Cost
Psychological Cost
Customer Value

6. • Total customer value is the perceived
monetary value of the bundle or economic,
functional, and psychological benefits
customers expect from a given market
offering.
• Total customer cost is the bundle of
costs customers expect to incur in
evaluating, obtaining , using, and
disposing of the given marketing offering.
•
Customer Value

7. Example: Customer Value for
“Fossil Watch”
• A customer will derive value from a Fossil Watch, based on
following parameters:

8. COMPONENBTS OF CUSTOMER VALUE
TANGIBLE VALUES INTANGIBLE VALUES
FUNCTIONAL VALUE SOCIAL VALUE
ECOMOMIC VALUE PRESTIGE/STATUS VALUE
CONVINENCE VALUE SENTIMENT VALUE
SENSORY & AESTHETIC VALUE EXPERIENCE VALUE
SERVICE(PEOPLE) VALUE BELIEF VALUE

9. TANGIBLE VALUES
• THEY ARE PHYSICAL & QUANTIFIABLE
IN NATURE.
• THEY CAN BE PIN POINTED
• THEIR EFFECT EXPLAINED IN
CONCRETE TERMS.

10. TANGIBLE VALUES
• Functional Value : It is the ability of the product to meet a given need. It
includes usefulness, reliability, durability, performance, resale value
,delivery and maintenance. Add more and more features to enhance
functional value. E.g. Apple, New lifebuoy, new vim bar etc.
• Economic Value : it is price advantage in a product/brand. E.g. Dabur
Honey vs. Patanjali Honey. Micromax, redmi mobile, Max etc.
• Convenience Value : It is related to easy procurability and convenience in
application/use of the product. Eg. Roti maker.
• Sensory and Aesthetic Value : Sensory value refers to the taste, looks,
smell, sound and touch of the product. Aesthetic value refers to the appeal
of the product/packaging/presentation to the aesthetic senses. E.g Maggi,
Nescafe, decoration in a restaurant etc.
• Service (People) Value : It encompasses promptness and quality of service
as well as good customer relationship. Service value gets translated to
best solutions to customer problems. e.g. 30 minutes delivery by Domino.

11. INTANGIBLE VALUES
• They are psychological
• They are also non quantifiable.

12. INTANGIBLE VALUES
• Social Value : A product has social value when its use confers social
acceptance or social desirability on the consumer.
• Prestige/Status Value : When its possession contributes to the user’s sense
of status/esteem.eg. Luxury Products
• Sentiment Value : It refers to product’s capacity to stimulate some
sentiments/memories/past associations while using the products.
• Experience Value : This refers to the personal experience of using the
product.
• Belief Value : When it helps the user reconfirm his religious/cultural
beliefs. Eg. McDonald no beef theme.
NOTE: THE TWO CATEGORIES ARE NOT MUTUALLY
EXCLUSIVE .THEY OVERLAP AND BLEND.

13. Consumer Benefits
• Consumers seek bundles of types of benefits:
– Tangible benefits: e.g., a watch keeps good time;
has leather band
– Intangible benefits: e.g., the “reliability” reputation of
the watch manufacturer; the image of the watch
wearer

14. The Total Product Concept
• Total product: refers to the sum of benefits offered by a
product, service, outlet, etc.
– Basic core: bundle of utilitarian benefits (e.g., design, features,
etc.)
– Accessory ring: added-value benefits with no apparent extra cost
(e.g., store reputation, manufacturer prestige, convenient
location, etc.)
– Psychological ring: benefits resulting from the consumer’s
feelings associated with owning/using the product (e.g.,
belonging, youthful, powerful, sexy, etc.)
– Time: products/service “give” or “take” time; this can be “good” or
“bad” (e.g., fast food versus conventional restaurant)

15. The value delivery process
Note the differences between the traditional process, value creation
& delivery process

16. Value creation and delivery consists of
three parts:
–Choosing the value (segment the
market, define target market,
develop “offering”).
–Providing the value (product
features, prices, and distribution
channels).
–Communicating the value (sales
force, advertising, and promotional
tools).