Value and benefit- The customer perspective
Customer needs are the reason behind the innovation of every product and service. Each person wants certain products or services which would be useful in having an easy life. Every organization looks out for a way to give 'value' to a customer. But what exactly is a 'value' for a customer and how does a customer benefit from it?
Value of a product or a service for a customer is the benefit which a customer receives for a price. Until and unless a customer receives a benefit from the product or service, it becomes invaluable for him. A car gives value to a customer as at a price he can travel from one place to another at his own will and that too with comfort. Here, independence, comfort and travel ease is the benefit which becomes a value for the customer at a certain price and the customer has a certain value for money. Similarly, a mobile phone or a computer also adds value to a customer's livelihood as it give benefits like reaching out to friends and family, maintaining a social life and also as a medium of leisure.
Similar is the case for service brands. People going for holidays through a tour package deal first seek the value which they are getting, which would be the benefit that they would get for a price. Thus, a product or a service gives value to a customer actually means that the customer is getting certain benefits for a particular price.
In short, value can be described as below:
Value= Benefit/Price
There are different ways a company can increase value for a customer. And the dynamics of value can be controlled by fluctuating the variations of benefit and price. Value of a brand, product or service can be increased by a simple method of reducing the price. If the benefits are kept same or even if benefits are marginally reduced, and the price is reduced considerably, people will find value in the product and purchase it. This why companies go for a 'sale' or 'discounted price' option as customers feel that they get higher value despite having the same benefits. Also, factory outlets of major brands are giving value to customers with minor benefit reduction but considerable decline in the product price.
Another method of increasing value for the customer is actually increasing the benefit. This can be done by companies by innovating breakthrough products. Also, if companies adopt an early mover advantage, then also set a slightly higher price as a new product would always give more benefit to the people. Apart from this, even if the price is kept same and minor benefits are added, the customer perceives it as value addition, and it influences his purchase decision.
Competition in every industry makes it difficult for organizations to acquire customers, and more importantly retain them and gain their brand loyalty. However, despite the competition, the most important thing for a company to succeed is to give value to a customer in terms of benefits for a given price.
