Chapter 2 Flashcards
Definition of Market Value
The potential of a product to satisfy a customers wants and needs.
Market Value has two components, namely the universal value and the personal value.
Universal Value
Universal values are linked to the expectations of the consumer in terms of the basic needs – things you would expect to get when you purchase a particular product or service.
(Aim to satisfy needs.)
Sought by the user is what the product or service can do for him or her.
Personal Value
Personal values can be broken down into group-specific personal values (those of the target market or a specific group) and individual-specific values (those that are there for the consumer to enjoy as an individual and which give him or her the feeling that the product has been customised to satisfy their individual needs).
The Matrix for Universal Values:
User: Performance Value
Payer: Price Value
Buyer: Service
The Matrix for Personal Values: Group Specific
User: Social Value
Payer: Credit Value
Buyer: Convenience Value
The Matrix for Personal Values: Individual Specific
User: Emotional Value
Payer: Financing Value
Buyer: personalisation Value
Social Values
Will move the consumer to buy a product or service that is in line with the norms and standards of their peer group or friends.
Emotional Value
The ability to satisfy emotions. Some consumers will buy a car because of it’s emotional value.
The consumer creates emotional value through experiential consumption.
Credit Value
Is created when the customer pays by credit card.
Financing Value
Is created when the payer is offered terms of payment to facilitate the buying of the product.
Convenience Value
The savings in terms of investing time and effort.
Personalisation Value
Created for the consumer by means of customisation and interpersonal relations.
Organisations perspective of measuring value
There has been a shift from merely measuring consumer satisfaction, towards measuring consumer value.
This is a more comprehensive and broader evaluation, since it incorporates looking at competitors and their customers, as well as own customers. This is done through the value metrics process.
The value metrics process.
Determining expected value
Formulating a strategy for delivering value to the consumer.
Measuring Value delivery.
Investigating deviations and adapting the strategy.
Determining expected value
The most basic way to do this is by creating a CSI (Customer Satisfaction Index) by means of an questionnaire. The organisation needs to build on the CSI by using the concept of Consumer Value Management (CVM)
Consumer Value Management (CVM)
The value component measures consumer satisfaction relative to the price paid for the product or service, and is called perceived value.
CVM measures the value perceptions of the competitors’ consumers.
By using CVM the organisation is able to determine:
The key buying factors ( key performance indicators) that consumers favour when they choose between an organisations product and that of the competitor.
How the organisation rates against its competitors in the key buying factor arena.
What the relative importance of these components delivering consumer value.
Formulating a strategy for delivering value to the consumer.
To prepare a strategy to deliver value to the consumer.
start by convincing the organisations personnel, including top management of the benefit of the CVM.
Once convinced the organisation must generate and implement action plans to deliver value to the customer.
Measuring Value delivery.
This can be done through CVM or the balanced scoreboard (BSC)
Balanced scoreboard (BSC)
This evaluates the performance of the organisation not only by concentrating on financial issues but also including non financial measures like employee satisfaction and innovation.
It can measure the long term value creation process in an organisation.
It can also be focused more specifically on the consumer; in doing this the brand must align the core consumer outcome measures.
Investigating deviations and adapting the strategy
The organisation have to determine if there are any deviations.
Then a new cycle of research starts to determine if the organisation is delivering what the consumer expects.
