Creating Customer Value Case

Economic value

When a product provides tangible monetary savings either at the time of purchase or over its long-term use. For example, an energy-efficient lightbulb or fuel-efficient car reduces the consumer's cost of owning these products.

Market-driven process

a firm uncovers the needs of its customers through market research

Feature fatigue

a recent study found that as more features are added to a product, its perceived capability to consumers increases, but its perceived usability decreases. Before they use a product, consumers say that capability matters more, but usability becomes far more important after they get a chance to actually use the product.

organizations can create experiential value in at least four ways

branding, design, customer experience, and customer service.

Customer service and customer experience

can be a source of significant competitive advantage to organizations.

Service-profit chain

demonstrated the link among employee satisfaction, customer satisfaction, customer loyalty, and customer profitability.

Experiential value

intangible psychological and emotional value that can be derived from brands or great service

Front-line employees

often receive the least compensation and the least amount of training in organizations. They are the most responsible for delivering superior customer experience.

Lack of training

results in an annual turnover rate of over 100%

Market-driving process

the company creates new products based on it own vision of the future.

Life cycle cost

the cost of owning the product over its entire useful life.

Economic value to the customer (EVC)

the maximum price that a customer is willing to pay for a product

EVC

the total life cycle cost or cost of ownership over the entire life of a product.

Network effect

the value of a product or service for a customer increases significantly as more and more customers adopt it.

increasing return to scale

when a firm increases its resources by a certain proportion and output increases by a greater proportion.

Brands

Brands signal quality, status, and image and therefore represent immense psychological value to consumers.

Four ways customers derive value from a product or service

Economic value, functional value, experiential value, and social value