It is important to understand two terms here namely Value and Values. Value refers to preferential judgment while Values refer to the decision criteria that shapes this preference. For example, when a housewife chooses a brand of microwave oven or a detergent she is communicating that the brand is more valuable than others. But what has made her choose that brand? Research shows that the following factors collectively influence a consumer’s decision to buy a durable product like microwave oven and hence may be termed as Values that customers look for:
The demographics and lifestyle of the customers are personal factors that influence her to buy a microwave oven. For example, a working woman’s need for a microwave is different from that of a home maker and, hence her expectations differ. This will affect her decision criteria and also the values she looks for when buying it. For example, the value of zero defect in the product is much more for her than for the housewife who may not mind waiting for service, in case of product failure. Hence, personal factors play a significant role in determining customer values.
One of the significant factors in the purchase of a product or service is its status value. For example, luxury products or premium priced products are often bought to enhance the status of the buyer. It is important to note that status value is attached to all those products which are perceived as aspirational by the target market. Today, many brands are brought by the customer to make a statement to his /her reference group by flaunting the purchase.
The economic perspective of a product purchase is its utility. Different target markets attach different utility values to the same product. For example, the younger customer (age group up to 25 years) may perceive staying in continuous contact with friends as the major utility of a cell phone. But the customer in the higher age group of 50 years plus may perceive a cell phone’s primary utility as a means of communication in emergencies only. Thus, a cell phone serves different needs of different groups of customers. It is important to note that the utility of a product lies at the core of its purchase proposition.
Many a time a customer’s social needs drives him /her to buy the product. When this happens the primary value a product serves is social. Hence the marketer needs to project it in its positioning statement. For example, a good neighbourhood / community is an important social value in the purchase of an apartment / house. Hence, leading construction companies in the country often state the community for whom they have planned the residential units. Some even narrate the experience of the families who have bought apartments and live in that area. Thus, affiliation acceptance by peer group, opinion leadership, friendship etc., are some important social motives which direct a customer to a brand / service.
Another important value in the purchase of a product reflected by its price tag. For example, moderate prices and product quality draw customers to Big Bazaar while the value of exclusivity attached to premium priced products draw customers to designer showrooms. Average price is an important value that customers look for when buying goods and services. This is particularly true in the context of price sensitive market segments. Researchers have established a relationship between price, perceived quality, and perceived value. This has introduced the concept of trade off in marketing literature. Invariably customers make a trade-off between price and quality and buy the brand which maximises value at a given price level.
Like utility and price, quality is an important core value in the customer’s decision making. As we shall learn in the quality is what a customer pays for and not what the company wants the customer to believe in. Hence, it is the perceived quality that is important to a customer. As was mentioned earlier, there is a relationship between price and perceived quality and, hence perceived value.
Another approach to understanding customer value is to examine a purchase situation as an experience Implicit in this are three keys situations: Value in purchase, value in consumption, and Post Consumption experience.
Some of the key issues in Value in purchase include convenience in buying, experience in the store and with the sales person, payment options, delivery at the point at which a customer may want and even comfort with technology in today’s market scenario. This is important as more and more firms and stores are offering their merchandise on the Net. Purchase on the Internet is greatly impacted by the customer’s sense of security with payment terms and disclosure of his/her credit card / debit card information.
Value in use, on the other hand is a functional outcome. It is a goal that is served directly through product consumption. Value is in the experience a customer has in consuming the product /service.