CUSTOMER VALUE

THROUGH
MARKETING
DU, XENA – DE CASTRO, MARY ANN – NG HANNIE
LEE – CANTOS, NEDLLYOD
 WHAT IS
CUSTOMER
VALUE?
 CUSTOMER VALUE
Customer value is a fundamental concept in the study of marketing and is usually covered in the opening chapter of a marketing textbook.

Virtually all organizations strive to deliver good overall value for both their current and potential customers value. Without providing true

customer value firms will be unable to attract and retain customers. And without customers there is no functioning business in the long-term.

Customers need to perceive that value exists for them – that is, they will receive more benefits than the costs they incur.

Therefore, in simple terms, customer value is when a customer perceives that the range of benefits they receive from a transaction exceeds

the cost and effort undertaken to participate in that transaction. 

 UNDERSTANDING CUSTOMER VALUE

When considering customer value, it is important to understand that it is much more

than simply a price/quantity view. That is, value is simply is not necessarily more
getting more for your dollar. If we take the view that value is simply how much I get
for what I pay, this situation makes no sense at all. It only makes sense when you
think about the range of benefits that the consumer will receive from a particular
purchase.
Keep in mind, however, that that value does not refer simply to price—
it’s the total benefit a consumer will receive from your product or
service by spending x amount of money. This extends past the product
itself to how the product makes customers feel, the status it may provide
them, and the time and energy they are willing to put into your brand.
HOW DO YOU MEASURE
CUSTOMER VALUE?
To keep it simple, this well-known formula is a standard way to measure
customer value:

CV=(perceived customer benefits – total

customer cost)
the key question, when considering customer value

“Which product offering

better suits my needs?”
Translating customer value
into customer loyalty
 The perfect loyalty program value proposition is a blend of hard and soft benefits that
provide both tangible and emotional value to customers with a purchase.

Hard benefits - provide customers with

HARD economic value. They are tangible and
BENEFIT consist of a promotional currency (such
S
as earning points or miles or receiving
special offers and discounts).

Soft benefits - provide customers with

SOFT emotional value. These are usually
BENEFI intangible in nature (like offering a special
TS status, privileges, or exclusive access to
products, services and experiences).

The right combination of hard and soft benefits will result in a loyalty program
value proposition that keeps customers engaged for the long-term.
 How to build loyalty—no matter your budget 

As a brand, you need to deliver quality

products, services or experiences that your
customers value. And in exchange, consumers
deliver value to you through purchases and
word-of-mouth recommendations.
 Investing in this value exchange helps your brand to
increase:

• Share of wallet: when customers spend their money with your brand
• Share of life: when customers invest their time in your brand
• Share of love: when customers invest their feelings in your brand

By targeting these three types of connections, you’ll naturally create longer-lasting customer
relationships. But investing in your value exchange does require financial investment. Thankfully, it’s
possible to accomplish in a variety of budget ranges—from free improvements all the way up to
significant advancements.
Improving your side of the value equation can also come to life in a variety of forms, such as internal
investments (like technology platforms) and external customer experiences (like a loyalty surprise and
delight reward).
 INNOVATION &
TECHNOLOGY IN PRICING
 PRICING INNOVATION

Pricing a new product is one of the most challenging marketing

decisions to be made. If the price is too high, it can scare customers away;
if it’s too low, you can leave substantial amounts of money on the table and
raise doubts about the quality of your offering.

It’s even more difficult when you are launching an innovative

product that customers are not familiar with, as opposed to a new product
in an existing category, since the benchmarks for determining value are
not evident. Not only do customers not know the benefit of the
innovation, but also no buying process has been established to provide
insight into the purchasing decision.
What guidelines can you follow to ensure a fresh
pricing approach can support the future growth and
profitability of your enterprise?
01 Ensure Product-Market Fit

It is crucial to first identify and deeply understand the problems and pain points plaguing
customers, and to what extent there is a demand and desire for the proposed solution.
Without a high degree of product-market fit, a product or service will have limited success.
You risk becoming a solution trying to sell a problem.

Pay Attention To How You

02 Charge
There are myriad ways an entrepreneur or innovator can charge for her new product or service. She can,
for instance, decide on a freemium model, pay-as-you-go approach, subscriptions, market-based or pricing
auction. It is important here to find the right pricing model because how you charge is often more
important than how much you charge.
03 Don't Be Afraid to Ask For A Price Increase
In addition to product-market and pricing model fit, you must also invest the resources to understand to what extent customers
are willing to pay for your product or service. There are numerous approaches to measure willingness to pay, and over the past decade,
considerable progress has been made in both academic and applied pricing research. However, straightforward approaches, like asking
for a price increase, can also work to determine how much a customer is willing to pay for your product or service. One startup
founders our firm worked with was able to get a tenfold price increase for his product simply by having the courage to ask for it.

04 Adapt And Realign Price To Value

The value conversation is an important one you must have early in the innovation process to ensure you are designing and
incorporating the features that drive value for the customer.

You must also remember that value drivers change over time. So, it is important to recalibrate and revisit the price-to-value
conversation often to remove features that are no longer delivering value and introduce new options to accommodate customers'
changing and evolving needs. In some cases, a whole new pricing scheme might be necessary. The misalignment of price to value is
one of the biggest reasons why we see growth stall.
Technological Factors That Impact Pricing
Strategies
 Technological Factors That Impact Pricing Strategies

Product Information Online

Once you have a product ready for market, you must make decisions about the type of product-related
information to make available to the public. For example, the Internet can provide information about a product
24 hours a day seven days a week. Both customers and competitors can use this information to evaluate your
product and pricing strategy. You can also use information available on the Internet about competitors’ products
to properly price the new product.
 Technological Factors That Impact Pricing Strategies

Online Retailers

If you wants to sell merchandise online, you will have to consider global competition. Unless you have an
established company, introducing a new product online poses several challenges. As an online retailer, aim to
develop a technologically advanced system for warehousing, order processing and shipping. Additionally, high
online price competition might require you to offer a product at cost or slightly above cost to remain competitive.
These considerations will greatly affect how you price products for your business.
 Technological Factors That Impact Pricing Strategies

Manufacturing

Technology also plays an important role in manufacturing, and this role also impacts the pricing of the product.
Technology can improve the manufacturing process, inventory control and automation. By considering the
savings and costs of these technological advances, you can determine an appropriate price for the product based
on the actual manufactured cost.
 REFERENCES
https://smallbusiness.chron.com/technological-
https://www.pricingsolutions.com/putting-the-right-
price-on-innovative-new-products/ factors-impact-pricing-strategies-22398.html

https://www.marketingstudyguide.com/cu
Pricing Innovation | Putting the Right Price on Innovat
ive New Products (pricingsolutions.com) stomer-value/

https://www.epsilon.com/us/
How retailers can use technology to optimise insights/blog/a-guide-to-creating-customer-value-
discounting and pricing strategies | RSM UK building-loyalty-at-any-budget

Technological Factors That Impact Pricing Strategi

es (chron.com)

How retailers can use technology to optimise

discounting and pricing strategies | RSM UK