Introduction
In business, ‘Customer Value’ refers to the entire benefits attained by a customer against costs incurred to acquire a particular product. This incorporates the total costs offered by the market compared to those of the other competing offers (Pride & Pride 2010, p.45).
Customer value can also be described as the perceived preference of a customer and his or her assessment of the attributes of different products, performance of the concerned attributes, and the consequences that could arise from the usage of these products. The usage of these attributes inhibits the achievement of the intended purposes and goals (Lamb 2011, p.34). There are five main elements of customer value.
The first value depends on the expectations and perceptions of customers. Not only do different customers have different expectations and perceptions but also preferences. In addition, the expectations and perception of a particular customer might change over time. Value assessment also necessitates the process of evaluation which can also be quite personal.
Another element is that different customers evaluate different attributes of products, their performance and the performance consequences. In addition, value can also be situational. And finally, the concept of customer value is related to the objectives as well as the gratifications of a customer.
Issues that marketers may face while making an effort to operationalize the concept of customer value
In marketing, a company should produce valuable products to satisfy vast customer segments (Peppers & Rogers 2010, p. 62). Concurrently, customers should be able to pay enthusiastically for the value provided. This will make the concerned business to evaluate its opportunity costs.
There are numerous ways in which different businesses create customer value. However, marketers must consider customer’s demands in order to deliver the best ‘Customer Value’. Most marketers find it really tricky to estimate the evaluation value. For some customers, a particular attributes of a product is more important than anything else.
For example, a costly product in the market might be perceived as having a higher value to customers (Ferrell & Hartline 2008, p. 24). Nonetheless, this might not be the case when considered critically. They offer numerous benefits than the expenses involved in acquiring them.
Other customers possess their specific needs. A product regarded by others to have a lower quality could be of a higher value. For example, some companies manufacturing clothes try to make them artificially look old. For instance, before a ‘Denim Jeans’ is sold to customers, it could be cut and made to look as if it is old. Actually, most customers are ready to pay higher amount of money for a single pair of denim jeans appearing to have been worn before.
However, to other individuals, the notion of paying for clothes that have been ‘aged’ artificially is just irrelevant. According to them, these pair of artificially aged Jeans should cost less as compared to their higher prices. This illustrates that customer value depends on the individual perception of the customer and varies from one person to the other.
Another issue that marketers are likely to face while executing the concept of customer value is constant variation of value and preferences by customers (Govindarajan 2007, p.52). Business ventures are forced to make changes in their products, practices, and business models so as to meet customer’s perceptions. This is important as it enables these businesses and marketers to remain the most preferred option in the current and the future market.
There are several factors that contribute to constant change in value by customers. Some of these factors include fashion trends as well as environmental conditions. For example, the value of a certain type of furniture will change with current fashion trends. The latest type of furniture will certainly have higher customer value as compared to old fashioned furniture.
Similarly, the customer value of jackets will change during winter, where they will be highly valued as compared to summer periods where they will have a relatively low value. This is because jackets have significant advantage during winter as compared to summer. Marketers are therefore faced with the challenge of constantly changing their products to meet the changing value of the customer.
Another example is the change of customer value. Most businesses embrace modern technologies incorporated with emerging marketing channels. Here, the major challenge that marketers are likely to face is providing appropriate promotion message of a given product at an appropriate time.
The marketers will find it tricky to determine exactly what the customer value is at a given time and whether they still perceive and prefer old technology instead of the new ones (Normann & Rafael 1993, p. 34).
On top of that, convincing costumers to go for older technology when they already perceive and appreciate new technology is a challenge to marketers. Precisely, it is really challenging for a marketer to maintain the consistency of a particular brand as well as be able to keep up with ever changing brands by its competitors to meet customer value.
There are some general benefits that manufacturers try to integrate into commodities or products in order to boost customer value (Pride & Ferrell 2006, p.78). Unfortunately, some customers may not appreciate or perceive these benefits. A customer will get benefits from a particular product only if they can appreciate, perceive and utilize it as expected by the manufacturer to attain individual values.
The kind of products that marketers offer in the market will only have value to the customers to the extent that the customers are able to put them to usage to satisfy their unique value. For example, a mobile phone manufacturer could automate switching on and off of his or her mobile phones for the benefit of a customer. However, some customers will not perceive or appreciate this design feature. Therefore, the customer value of the product will be lower than expectation of both the manufacturer and the marketer of the product.
Different products and services offered by marketers have increased competition within concerned industries. Therefore, gaining competitive advantage is quite necessary for the survival of each and every company. Manufacturers and marketers must strive to ensure that they only deliver great customer value.
However, besides the aforementioned challenges, another task faced by marketers is how they can precisely define the customer value, measuring it then creating exactly what customers need in the market (Pride et al. 2012, p. 67). This is to say, creating products which customers will consider having a higher value. The most vital part in carrying out strategic marketing is proper management of customer value as it will enable them to create and deliver great value of products and services to their customers.
A typical example is evident in the companies that manufacture different brands of drinks. It is difficult for a manufacturer to estimate the level of satisfaction that a particular customer will get from a preferred drink to the other. Therefore a marketer will have a challenge in promoting or delivering the exact value that the customer will be fully satisfied with.
This is an important provision. It is important to enhance the aspects of ‘customer value’ with regard to marketing as indicated earlier. For example, producing products with critical customer value might enhance sales, satisfaction, profitability, and brand promotion.
Conclusion
Understanding the aspects of ‘customer value’ is very important in any business. This enables businesses to improve their products so as to satisfy their customers. It will allow them to remain relevant providers of quality products. However, customer values are diverse and constantly changing; hence, complex to understand. In some cases, a great customer value hardly means that a customer gets considerable satisfaction.
The satisfaction of customers while buying a product basically relies upon both their perception as well as their appreciation of the product. Without proper understanding of these concepts, marketers will always be faced with challenges in trying to operationalize the concept of customer value.
In a business environment (characterized by high competition, customer value, and changes rapidly), manufacturers and marketers should have integrated and optimized processes for their marketing. In addition, their systems for marketing should also be innovative to deliver great customer value. This is a critical provision when considered decisively with respect to customer value. Examples used in this context supported the mentioned aspects of customer value with regard to marketing.
List of References
Ferrell, O & Hartline, M, 2008, Marketing, Cengage Learning, New York, NY.
Govindarajan, J 2007, Marketing Management: Concepts true Challenges And Trends, PHI Learning Pvt. Ltd., New Delhi.
Lamb,C 2011, Marketing,Cengage Learning, New York, NY.
Normann, R & Rafael R 1993, ‘From Value Chain to Value Constellation: Designing Interactive Strategy ’, Harvard Business Review, vol. 71 no. 1, pp. 65-77.
Peppers, D & Rogers M 2010, Managing Customer Relationships: A Strategic Framework, John Wiley & Sons, New Jersey, NJ.
Pride W & Pride, O.C, 2010, Foundations of Marketing, Cengage Learning, New York, NY.
Pride, W & Ferrell, O.C, 2006, Marketing: Concepts and Strategies, Cengage Learning, New York, NY.
Pride, W., Ferrell, O., Lukas, B., Scembri, S &Niininen, O 2012, marketing principles, Cengage Learning, Melbourne.