The Concept of Value

Economics theories teach us that man is guided by the idea of ‘utility’ in his purchase decisions. He will select a product that offers him the maximum utility for the money he parts with. In marketing, the idea of utility gets enlarged; many considerations besides utility enter the picture. In other words, to the theme of utility, the buyer adds several things; he seeks a mix of benefits. To put it differently, he seeks value.

The Linkage among benefit-value Cost Satisfaction:

It is obvious that it is through its market offering that a firm extends benefits, the benefits sought by the customer. The customer assigns different weightages for the different benefits that he seeks from the offer and makes a mental note of the total value provided by the offer. The total weight he assigns to a product offer reflects the value he perceives in it. The customer has to pay a cost for acquiring this value. This cost includes the price of the product plus other elements of cost to him, economic ad non-economic. He is happy when the value exceeds the cost he incurs. And, he gets satisfaction when on using the product he finds that the value he actually receives matches the value that he assumed. The larger the value-cost gap, the greater is his satisfaction. He compares the value-cost gaps of competing offers and selects he one that gives him the best trade-off.

In the above discussion, we have put the linkage among benefit-value-cost-satisfaction in a very simple form. And, it is implied that a business form has to achieve the best possible configuration of benefit-value-satisfaction, a configuration that appeals most to the customer. In actual, arriving at such configuration is a challenging exercise. The entire job of marketing management commencing with planning and strategy formulation, and extending to control of the marketing effort is concerned purely with this task arriving at the winning configuration of benefit-value-cost-satisfaction.

The marketing concept gets executed through value delivery:

The marketing concept aims at the satisfaction of the customer. We have now seen that the satisfaction emanates directly from the value that the firm delivers to the consumer. It will be clear that the marketing concept gets executed through the value delivery process.

The firm searches and finds out what benefits are sought by customer and build them into its market offer. Its task is to pack its offer with as many of these benefits as possible. It means that the firm builds into its offer as much of value as possible. It also ensures that the customer feels his expectation of value have been met at the end of the purchase process. In other words, the marketing concept gets implemented when a firm searches for the benefits sought from it by customer and builds them into its offer.

To put it more succinctly, the marketing concept is in operation when a firm satisfies the customer by offering him superior value compared to competing offers. The customer’s expectations are the clues to the value to be offered. The firm conducts detailed analysis of the market, the customer and competition. Buyer analysis, market research and marketing planning are the tools through which the firm acquires these insights.

The firms builds benefits/value into the Market offer:

The firm incorporates the benefits that it wants to provide to the customer into its market offer. The firm has a value creating and value delivering system. It includes the firm’s production facilities, processes, organization, expertise, etc. exploring more about this in later chapters. Suffice to say here that through its value creating and value delivering system, the firm makes out the best possible assemblage of benefits as per the customer’s expectations and puts it across in the form of its market offer.

The firm’s marketing mix is the tool kit available to it for delivering the intended value to the customer. It is through the blending of the marketing mix elements into an attractive combination that the firm makes an offer to the customer. This offer is a cluster/bundle/assortment of the benefits he seeks. A competing offer from a competitor is another such bundle.

By adjusting any element of the Mix, Value can be enhanced:

The firm can enhance value by adjusting any of the elements of the marketing mix. For example, it can enhance value through:

1. Increasing the functionality of the product
2. Reducing the price
3. Giving better service support
4. Giving the customer easy access to the product
5. Offering beneficial communication

When the firm ingeniously uses all the elements of the marketing mix for providing more value to the customer, it becomes a winner in the market. And, offering such value is the essence of a winning marketing strategy.