One of the most common reasons of a business be it small or large, failing is because they fail to acknowledge the value to customers. The difference between what a customer gets from a product and what he or she has to give in order to get it. The concept of value is one of those things that is both simple and complex. Simple because sometimes what customers value is easily known and complex because it can only be defined by the customer, and can include tangible and intangible concepts such as perceptions and opinions.
Now we move into the area called customer perceived value.
The Value to the Customer OR Customer Perceived Value as it is called is defined IN THE BOOK 'Marketing Management' by Philip Kotler :
"the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives."
According to the book "Total Customer Benefit" is
"the perceived monetary value of the bundle of economic, functional and psychological benefits customers expect from a given market offering because of the product, service, people and image".
Similarly, the "Total Customer Cost" is
"perceived bundle of costs customers expect to incur in evaluating, obtaining, using and disposing of the given market offering, including monetary, time, energy and psychological costs".
According to the diagram and statement mentioned above, we might be able to decode the book's view on the concept of '
Value of Customer'
According to the book the Total Benefit derived by the customer is the total summation of Product benefit, Services benefit, Personnel benefit and the image benefit of the product.
Product benefit-
Benefit in this category would account the different attributes and characteristics which may entice a potential customer to go for the product instead of any other product in the market given a similar choice.
I. in the case of Vaseline petroleum jelly, the benefit of using the product is the moisture effect of the jelly on the skin to protect it from dry skin.
Services benefit-
This benefit would cover those characteristics of the services offered along the product. Any kind of assistance or grievance associated with product or instruction will fall under this.
ii. All kinds of instructions on the jelly jar would be served as services. Contact details are printed on the jar, to help the customer contact the service desk and interact with the brand personally mostly through email, chat or a phone number.
Personnel benefit-
This includes customer's own perception of what really is utility value of the personnel in the system to him/her. A better trained and knowledgeable personnel assisting a customer would be a great help.
iii. In the case of Vaseline petroleum jelly, the product is really not subscribe to the concept of personnel selling the product. But, a trained personnel assisting a customer during their complaint would be great help.
Image benefit-
The image or the brand of the company plays a huge role in the market and has an important effect on the customer's decision. Reputation and image of the company together from a very crucial part of customer's interactions with a brand depending upon the circumstances he/she has experienced during his.
iv. Vaseline has a huge brand presence here in India. Hence buying a Vaseline jelly during winters is a necessary thing.
On the other hand, similarly the Total cost to the customer comprises of monetary cost, time cost, energy cost, and psychological cost.
Monetary cost-
Monetary cost is the literal cost bear by the customer in order to obtain the product. This cost includes every kind of expenses on the customers part like travelling to buy the product etc..
a. For buying the a jar of petroleum jelly a customer will have to go a shop by covering 'x' number of distance and plus the money on it.
Time cost-
This cost includes the total amount of time spent by a customer during the buying process of the product. This includes the total time that was ever required from the buying idea to the actual time when the product was acquired.
b. In the case of Vaseline, calculating the time cost is difficult because outcome could be in seconds minutes or hours and more.
Energy cost-
The energy spent by the customer in acquiring the product during the entire process of buying.
c. It is not very clear as to in what terms the energy has been used here and physically measuring the total energy spent in the process would be very difficult.
Psychological cost-
The total mental effort made during the buying acquiring, maintaining, using, sustaining the product from the moment it was bought to the moment it was rendered useless.
d. Method of calculating the psychological cost of the Vaseline is another matter of discussion and requires a lot of data on how humans tax themselves psychologically.
Now after analyzing all the points and there sub-points we can infer that 'Total Customer Benefit' and 'Total Customer Cost' are functions of the their components, and if one observes closely, they do not belong to the same class and hence are not comparable. Thus, getting an exact value called either the 'Total Customer Benefit and 'Total Customer Cost' is not possible.
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