We define value as the set of benefits, which includes product features and services, minus the price, that the company markets to a segment of customers.
Benefits are a function of the importance of different attributes and how well a product delivers these attributes. In many cases, value is based on perceptions. For example, customer perceptions of how a product delivers certain attributes might be very different from what was engineered into the product by R&D. The customer determines if there is a compelling enough reason for them to buy, in terms of saving time or money plus all the positive emotional benefits.
Value is a trade-off
Value is the perceived worth of something in relation to the total cost that customers pay for it. This definition underscores the fact that value is a trade-off between costs and benefits. A key metric is the total value of ownership.
Value is contextual
You cannot divorce the value of a product from the context in which it will be used. Unless you understand the end-usage context, you run the risk of creating value propositions and offerings that are irrelevant for customers.
Value is relative
Customers never assess value of an offering in isolation. They always consider value relative to alternatives. These alternatives may not be other products or systems, but other ways of accomplishing the same goals or doing nothing at all.
We can help you develop a compelling value proposition for your customer that is quantified in customer terms. An effective value proposition reflects the total business impact and value delivery capability your organization offers.
For more information, contact us toll free at 1-877-ROI-Calc (1-877-764-2252) or email us at info@roi-calc.com