Value Perceptions Among Customers
March 10, 2014
Organizations should think strategically when creating value perceptions of their products or services. In fact, they should seek to establish a formal tiered system where possible. Strategic leaders have a long view on value creation.
Strategic thinking is defined as ‘the generation and application of business insights on a continual basis to achieve competitive advantage.’ In fact, strategic thinking focuses on value creation by enabling a provocative and creative dialogue among people who can affect a company’s direction.
Marketing expert Ken Favaro maintains that putting value creation first gives businesses two advantages over their competition in driving for profitable and sustainable growth: the first is capital and the second is talent. In fact, he argued that successful value creators never suffer from capital shortage.
Yet, this process shouldn’t be done in a vacuum. Customers and all members of the supply chain should provide input so that the expectations are clear. Businesses that pay more would get more benefits (i.e. certain perks, discounts, etc.). Therefore, the value proposition would be enhanced.
However, being strategically conscious about these business relationships isn’t simple. Value must be understood and sought out. Value is viewed as the perceived experience and worth gained from a product or service. Organizations should make their product clear to customers; some businesses need to introduce a tiered system, based on value-added services.
For example, if I want cheap fast food, I go to McDonalds. Therefore, my expectations are lower than going to a five star restaurant. Customers are very understanding when the seller’s value proposition is clear. Favaro further suggests that putting value creation consistently first requires leadership skills, discipline, and perseverance. He further challenged organizations to demand higher standards from managers who would jeopardize these business relationships.
Mark Johnston and Greg Marshall, authors of Relationship Selling, discuss that perceived value is in the eyes of the customer and varies. They further argued that customers expect and deserve consistency in the way an organization’s value-added message is put forth. Therefore, sales professionals’ biggest challenge is selling value.
Please discuss value perception of customers from your professional experience.
© 2014 by Daryl D. Green
March 12, 2014 at 9:01 pm
Hello Billey,
Interesting! So…a customer value can change depending on the situation (i.e. hunger)!
Professor Green
March 15, 2014 at 3:55 pm
Customer value can most definitely change depending on the situation. For example, another way to consider this is if one is traveling along the interstate and becomes thirsty, he or she would plan to stop and purchase a soda or bottle of water. However, by stopping at a convenience store, this person would more than likely pay more per bottle for that beverage than if he or she bought a multi pack of that same beverage at the grocery store near their home. Obviously, one would be willing to pay more at the time, as it is the only option. The drink is valuable to the thirsty traveller therefore cost takes a backseat.
March 12, 2014 at 9:00 pm
Jenelle,
Outstanding!
All,
What do you think the impacts of an organization’s brand on the value proposition for customers?
Professor Green
March 15, 2014 at 4:21 pm
A brand name can have a significant effect on value for customers. There are consumers who are extremely loyal to one brand or another as the name itself adds value, while there are others who are much more concerned with price than the brand of the product. This can be tricky for companies, as they must produce a product that people want, no matter what over a similar product of their competitor. According to Brakus, Schmitt and Zarantonello (2009), “marketing practitioners have come to realize that understanding how consumers experience brands is critical for developing marketing strategies for goods and services.” If a company can achieve brand loyalty, they must not let down their guard, or risk loosing their standing to the competition.
Brakus, J., Schmitt, B., & Zarantonello, L. (2009). Brand experience: what is it? how is it measured? does it affect loyalty?. Journal Of Marketing, 73(3), 52-68. doi:10.1509/jmkg.73.3.52.
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Value perceptions among customers
Kokemuller (2014) notes in his article that perceived customer value is a marketing and branding related concept that points out that the success of a product is largely based on whether customers believe it can satisfy their needs. As a result of my work experience with Papa John’s I know that they use a differentiation strategy to distinguish its brand from the competition. They express it in their logo “Better Ingredients. Better Pizza”. When customers buy from papa John’s they are expecting a better quality and a better tasting pizza every time because this is the marketing message that the company uses to create brand loyalty and preserve its brand image. After all, value is the perceived experience and worth gained from a product.
Kokemuller, N. (2014) What is customer perceived value?. Retrieved from http://smallbusiness.chron.com/customer-perceived-value-23692.html on March 11, 2014.
I know that if I want a cheap pizza that satisfies my hunger I can go to Domino’s Pizza or Little Caesars. However, if I want a pizza with great tasting pizza sauce, flavorful pepperoni, and a variety of toppings that never disappoint I can go to a place like Papa John’s. I know going into the transaction that I will be paying more for the pizza. It’s a no brainer that one must pay for quality, but Papa John’s must continue to deliver on their value proposition. Am I willing to pay a few dollars more for a pizza that I must wait 20 minutes to retrieve or will I be satisfied with a $5 pizza ready when I arrive to the store?