PERCEIVED VALUE

Saturday Brain Storming Thought (171) 13/05/2023

PERCEIVED VALUE

Perceived value is a customer’s own prediction of a product or service’s merit or desirability to them, especially in comparison to a competitor’s product or service

Perceived value is measured by the price the public is willing to pay for a good or service

Importance of perceived value

1) significant in marketing

2) people who think product is worth are willing to pay more

3) people will not buy if it is worth less

4) customers purchase goods or services based on previous worth

5) goods or services should be worth at least what customers spend

6) branding, promotion and product availability helps customer feel emotionally connected to company and its product or service

Types of perceived value

1) Form – the design or look of a product or service is it’s form

2) Task – increasing the task value of a product or service means making it better at saving people time, money or energy

3) Availability – high availability value are vending machines, customer service open 24 hours a day, and digital or online products

4) Emotion – company doing right things to make the customer feel emotionally connected to the brand

5) Pricing – Pricing can change value of a product or service from customers point of view

6) Discounts and sales are great ways to create affordable prices that customer will like

7) Reputation – the reputation and brand of a company can affect value to customers

8) reputation may be improved by offering secure check out and faster connection speeds

Factors of perceived value

1) strategic consistency

2) customer loyalty

3) mission marketing

4) perceived Cost

Nature of perceived value

Value is the outcome of an evaluative judgement, whereas the term values refers to the standards, rules, criteria, norms, goals or ideals that serve as the basis for such an evaluative judgement

Perceived value formula

Perceived value = (perceived benefits) / (cost)

Perceived benefits are the benefits that are customer perceives from using a product and using it on a regular basis

Author of perceived value theory

Zeithaml (1988) defined perceived value is the customers overall assessment of the utility of a product based on perceptions of what is received and what is given

Proposer of perceived value theory

Sheth et al (1991) put forward the theory of perceived value, which classify perceived value into five categories including functional, emotional, social, epistemic and conditional value

Higher perceived value

1) value of product or service based on how much customers want or need it, rather than on its real price

2) selling your product at a higher price increases the perceived value because people associate high prices with quality

Types of customers perceived value

1) Monetary perceived value – many businesses use promotions like discounts and coupons to increase the monetary value of their products

2) Functional perceived value – it is a product’s ability to resolve a specific problem, ie it’s primary function

3) Social perceived value – it is a product’s ability to increase the customers Social standings, this may be asan object of prestige

4) Psychological perceived value – it refers to a product’s ability to influence the customers emotions

Utility created by perceived value

1) Form utility – design and physical appearance of product ie aesthetic appeal

2) Task utility – ability of a service to meet the customers demand

3) Place utility – it relates to a product’s availability and ease of access in specific locations

4) Time utility – it provides added value to the customer by making a product available at a specific time

5) Possession utility – it refers to the ease of purchase or the ability to possess for a product

Market and audience research is important for brands looking to increase the value of their products for specific customer groups

Not all customers will respond to the same utility offerings

Measures to influence and increase customers perceived value

1) focus on your time saving attributes – time is more valuable than money

2) Emphasize feel good attributes

3) Build your brands reputation and creditability

4) Use testimonials throughput your site – collecting and displaying customers reviews

5) Offer free returns

6) Offer intent based promotions

Ways to increase your perceived value

1) improve design aesthetics

2) raise product price

3) use charm pricing

4) emphasize quality

5) convey authenticity

6) leverage influencers

7) point out that a product is worth more than you are charging

8) embrace social responsibility

Customer perceived value is a function of price and quality

Quality is composed of

1) product related components

2) service related components

3) promotion realated components

Customer perceived value depends upon

1) corporate reputation

2) information sharing

3) distributive fairness

4) flexibility

5) word of mouth

6) customer exit

Psychology behind perceived value theory

The greater the logical, physical and emotional benefits of your products or services in comparison to expectations, the higher that impression will be

Perceived effect

It can be defined as the creation of sence data by categorization

This means that human being tend to view objects as examples of larger concepts rather than as a unique object in itself

Factors of perceived value

1) desirability of a product

2) product quality

3) customers expectations about product or service

4) price in relation to other similar products or services

Components of perceived value

1) customers perception of your product or service

2) price that customer willing to pay for product or service

Difference between value and perceived value

1) value is what the product or service costs

2) perceived value is what your customer think it should cost

Elements of perceived value pricing

1) product experience

2) support to service

3) warrenty

4) reputation

5) trustworthiness

Key Takeaways of perceived value

1) customers own perception of product or services merit or desirability to them, especially in comparison to a competitor’s product

2) perceived value is measured by the price the public is willing to pay for a good or service

3) marketing of a product or service involves attempting to influence and increase its perceived value, which can emphasize qualities such as it’s aesthetics design, accessibility or convenience