Defining value in marketing is a bit tricky because it is perceived by customers as per their experience. Buyer Behaviour cannot be defined; customers have an enigmatic approach towards their buying process. Value is evaluated by customers in terms of the benefits they derive by using a brand. Customers compare costs of equivalent brands depending on what benefits they derive from each. The basic underlying concept of value in marketing is need satisfying. A customer’s perceived value is equal to the benefits derived divide
d by the cost. Therefore, value = benefits/Cost. Please understand that benefits include functional and emotional benefits and costs include monetary costs, time costs, energy costs, and mental assessment costs etc. The notion of value does not remain constant in the mind of customers. It changes from time to time.
Functional Value is what an offer does; it’s the solution an offer provides to the customer.
Monetary Value is whether the function of the price paid is relatively comparable to perceived worth of a product. This value invites a trade-off between other values and monetary costs.
Social Value is the extent to which owning a product or engaging in a service allows the consumer’s connect with others.
Psychological Value is the extent to which a product allows consumers to express themselves or feel better.
The biggest challenge for a firm therefore is for delivering value to their customers, they must consider what they are offering the customers. The perceived value of a brand includes the reputation of the organization, staff representation, product benefits, and technological characteristics as compared to competitors’ market offerings and prices. Value can thus be defined as the relationship of a firm’s market offerings to those of its competitors. Marketers must therefore get in the consumer’s shoes, then observe, listen and understand how they think, act, feel and behave. The fact is customers don’t always express in words what they expect from a brand; they have many innate or instinctive desires which they are unable to express always. They have their own fears, complexes, frustrations, ambitions and desires which they can rarely explain.
For example, if you are starving in the afternoon and need to have a quick bite and you pass by a food stall where you see various types of ready-made sandwiches in the window. What will make you buy one of them? You purely go by the looks of the sandwich? Will you buy a whole grain bread sandwich or the organic ingredients? While your hunger drives the initial buying behaviour (the benefit), there are other, more subtle, components to selecting one sandwich from the assortment: the freshness, aroma, the tossing used in it, the size, shape, butter/mayonnaise layer, whether your want a toasted sandwich or plain…. As customers, our needs are layered and complex and marketers must primarily identify consumer needs, and then ensure benefits which will fulfil those needs and features that offer advantage.
In another example, if you are travelling with your friends to a hilly destination in rainy season, on the way you all stop at tea stall for having piping hot tea, and you hear one of the nostalgic songs on the radio with your friends. All of you love the song, and it brings back some old memories, the tea becomes ‘valuable,’ though it may just cost ₹ 5/- each cup. The atmosphere, the feeling, togetherness with friends, rains everything adds to the value of a cup of tea.
Value in marketing is defined by both qualitative and quantitative measures. On the qualitative side, value is the perceived in terms of individual’s emotional, mental and physical condition plus various social, economic, cultural and environmental factors. On the quantitative side, value is actually counted in terms of how much amount the customer spent to buy the good/service which includes his cost of time.
Perceived customer value is marketing and branding related concept which indicates that success of a product is largely based on whether customers believe it can satisfy their needs or not. When marketers devise promotional strategies, they must understand that customers ultimately determine and interpret and react to marketing messages based on their experience of life. Therefore, companies spend significant time researching the market to get a sense of how customers think and feel. Satisfaction is a person’s feelings of pleasure or disappointment resulting from comparing a products performance in relation to the person’s previous experience and expectations of performance. Most expectations are derived from past buying experiences: opinions of friends and peers, reputation of marketer, available substitutes, and promises made by marketers, and performance.
The USP of Indigo Airlines is ‘’On Time Performance, Lowest Price” India is becoming one of the fastest growing aviation industries in the world. Because of the introduction of no frills air services, low cost air services are catching up fast. The air tickets are comparable with the railway tickets literally. Some of the factors that have resulted in higher demand for air transport in India include the growing purchasing power of middle class, low airfares offered by low cost carriers and the growth of the tourism industry.
Indigo is a no-frills carrier, but insists on reaching its passengers to their destination in time. The airline is at number one in India at the moment, because its customers are experiencing consistency in their services of reaching destination in time. It outsources in-flight catering/eatables from an outside vendor. These are presented to customers on payable basis. This strategy is helping the airline in keeping the cost of operation low and passing on the benefits to end customers. In 2015, a survey conducted for ranking various airlines, Indigo scored highest ranking in most parameters but vitally on these two: time taken to deliver baggage & In-cabin maintenance. On the factors of ‘value for money’ and ‘on-time performance’ Indigo stood out as a winner.
Marketers must realise a fact that a person is twice as likely to tell others about a negative product or experience as they are about a good product or positive experience. Dissatisfied customers can also have a negative impact on employee morale.
Value Proposition: To comprehend customer’s perceived value, marketers must understand value proposition. A value proposition is a comparison of the benefits offered by a company’s product to its customers in relation to its price it asks customers to pay. Companies usually influence the value proposition in some ways: they use long-term brand building advertising to emphasize key traits of the brand and products. And, they can also offer a relatively low price to enhance value. Ultimately, the key is that customers perceive the product’s merits exceedingly to justify its price.
For example, Hindustan Unilever promotes diverse ideas of beauty of women through their soap brand Dove. The campaign talks what beauty is all about. Confidence, career, self-reliance, education, power, multi-tasking, self esteem all of this makes a woman more beautiful. Dove commercial always promotes the real worth of women power. Their latest advertisement in India is no different. This advertisement brings out the fact that in a anthropologically diverse country like India, there cannot be one standard of female beauty. The ad is appealing to the women folk so much that Dove is one of the most admired soap brands! Unilever is pragmatic and knows the country’s cultural roots. India is experiencing a real movement towards female empowerment, and that is captured in their ad.
Marketing Research: Media plays major role all over world. Companies who understand that they must touch the pulse of customers focus on research. It is critical to understand how certain types of customers will respond to certain messages and therefore choosing the right media vehicle becomes crucial. Smart companies use focus groups, surveys and test markets, along with other research tools, to get a sense for what customers want and do not want from products in a given industry.
Right messaging: To influence value perceptions, companies try to deliver messages indicated by their marketing research, which would create desired sense of value with customers. Smart companies understand that they need to connect with their customers regularly. They therefore, express messages such as best quality, best service, unique features or environmentally friendly continuously. To influence the customer value perception, marketing messages must be consistent. The real crux of marketing campaign is to reach the right audience with the right message at the right time. And, in the digital marketing sphere, there is nothing called as a single and a big. Digital marketing campaign has a far and wide reach.
Strengthening value chain is key function: The basic objectives of employing value chain management in a business are to integrate communication and increase cooperation between various functions such as production, supply chain, sales, and marketing, after sales service, R&D and firm’s infrastructure. When firm’s value chains strong, quality, price, delivery time of product and after sales service helps in increasing value proposition.
