by Kenneth Rudich
This brief video module defines and explains the concept of value from a business and marketing standpoint. Please take a moment to let me know if you like it, or if you have any suggestions for future modules.
In addition to outlining the learning objectives below, I’ve also supplied the transcript of the audio portion.
This module covers the following learning objectives:
- Learn the different ways of referring to value
- Discover two ways of defining value
- Recognize the four perceived benefits of value
- Become acquainted with the three motives associated with the costs of value
- Become agile with combining the benefits and costs of value
- Learn to achieve value fulfillment
transcript for marketing value module
Welcome to a Marketing Strategy Management mini module on…
The Concept of Value
Sometimes also referred to as creating value
Or value creation
a business’s value proposition
Or just plain value
Simply defined…Value makes someone feel like they got a good deal at a good price.
But we can look at it from a more analytical perspective too.
In this case, we can define value as the perceived benefits relative to the price or cost.
And then, we can delve more deeply into this definition by further dissecting it. The question to ask is: What are the customer’s motives?
Let’s start with the perceived benefits.
Are they looking for social benefits, like a night out at the club or maybe a social networking website?
Is there a functional motive? For example, a vacuum cleaner serves a functional purpose.
Are there physiological motives? Like something related to food, water, sleep, or breathing. Think, for example, of medicine that helps an asthmatic to breathe or a sleep aid for someone having trouble with it.
Lastly, are there psychological motives? Like the thrill of a roller coaster ride.
At some point, the perceived benefits get weighed against the costs.
For example, is the customer willing to buy it?
And is the customer able to buy it?
These two go hand in hand. A customer may be willing but not able…or vice versa.
And lastly, when relevant, is the customer authorized to buy it?
When all these elements are laid out together like this, you now have the basic ingredients for creating value. Whether or not you actually create value is determined by how they’re assembled, and for whom.
The thing to bear in mind is that satisfying motives, not just needs, is at the heart of creating value.
For instance, a financially strapped individual may want the prestige of a luxury car but will settle for an economy car instead. In this case, the functional need, combined with a lower cost, clearly outweighs his psychological motive for prestige.
Others, on other hand, may be willing and able to buy the luxury car.
If able is not a concern, then the decision hinges more on perceived benefits.
If the price or cost exceeds the perceived benefits, where one or more motives are either under-served or not served, then value does not exist.
If the perceived benefits equal or outweigh the costs, then value exists.
When you get it all mixed together just right, it leads to value fulfillment.
And that produces happy customers.
This has been a mini module on the concept of value.
For more on this and related subjects, visit Marketing-strategy-management.com