Customer Perceived Value

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Customers will buy from the firm that they see as offering the highest perceived value . Customer perceived value (CPV) is the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives. Total customer value is the perceived monetary value of the bundle or economic, functional, and psychological benefits customers expect from a given market offering. Total customer cost is the bundle of costs customers expect to incur in evaluating, obtaining , using, and disposing of the given marketing offering.

Customer perceived value
An example will help here. Suppose the buyer for a large construction company wants to buy a tractor from Caterpillar or Komatsu. The competing salespeople carefully describe their respective offers. The buyer wants to use the tractor in residential construction work. He would like the tractor to deliver certain levels of reliability, durability,  performance, and resolve value. He evaluates the tractors and decides that Caterpillar has a higher product value based on perceived reliability, durability, performance, and resale value.  He also perceives differences in the accompanying services – delivery, training, and maintenance – and decides that Caterpillar provides better service and more knowledgeable and responsive personnel. Finally, he places higher value on Caterpillar’s corporate image. He adds up all the values from these four sources – product, services, personnel, and image – and perceives Caterpillar as delivering greater customer value. Does he buy the Caterpillar tractor? Not necessarily. He also examines his total cost of transacting with Caterpillar versus Komalsu, which consists of more than the money. As Adam Smith observed over two centuries ago, “The real price of anything is the toil and trouble of acquiring it. “Total customer cost includes the buyer’s time, energy, and psychic costs. The buyer evaluates these elements together with the...