Chapter 2

Question 1

Definition of Market Value

Answer 1

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.

Question 2

Universal Value

Answer 2

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.

Question 3

Personal Value

Answer 3

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).

Question 4

The Matrix for Universal Values:

Answer 4

User: Performance Value
Payer: Price Value
Buyer: Service

Question 5

The Matrix for Personal Values: Group Specific

Answer 5

User: Social Value
Payer: Credit Value
Buyer: Convenience Value

Question 6

The Matrix for Personal Values: Individual Specific

Answer 6

User: Emotional Value
Payer: Financing Value
Buyer: personalisation Value

Question 7

Social Values

Answer 7

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.

Question 8

Emotional Value

Answer 8

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.

Question 9

Credit Value

Answer 9

Is created when the customer pays by credit card.

Question 10

Financing Value

Answer 10

Is created when the payer is offered terms of payment to facilitate the buying of the product.

Question 11

Convenience Value

Answer 11

The savings in terms of investing time and effort.

Question 12

Personalisation Value

Answer 12

Created for the consumer by means of customisation and interpersonal relations.

Question 13

Organisations perspective of measuring value

Answer 13

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.

Question 14

The value metrics process.

Answer 14

Determining expected value
Formulating a strategy for delivering value to the consumer.
Measuring Value delivery.
Investigating deviations and adapting the strategy.

Question 15

Determining expected value

Answer 15

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)

Question 16

Consumer Value Management (CVM)

Answer 16

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.

Question 17

By using CVM the organisation is able to determine:

Answer 17

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.

Question 18

Formulating a strategy for delivering value to the consumer.

Answer 18

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.

Question 19

Measuring Value delivery.

Answer 19

This can be done through CVM or the balanced scoreboard (BSC)

Question 20

Balanced scoreboard (BSC)

Answer 20

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.

Question 21

Investigating deviations and adapting the strategy

Answer 21

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.