MANAGING CUSTOMER

PERCEIVED VALUE
CUSTOMER PERCEIVED VALUE (VALUE FOR
CUSTOMER)

Value is the customer’s perception of Company-

the balance between benefits supplied
stimulus Customer
received from a product or service
perceived value
and the sacrifices made to experience
Noise
those benefits. (Francis, 2019)
CUSTOMER PERCEIVED VALUE – Benefits
less costs
Customer perceived benefits

Functional benefits relate to the capabilities and the performance of the

Functional benefits
company’s products/services
Conditional benefits refer to the context, situation, or circumstances of that
Conditional benefits shape the customer’s perceptions of value, where some conditions lead to
higher value for certain products/service attributes tuỳ theo thời vụ

Social benefits derive from the customer’s ability to associate with a social
Social benefits
group and/or to improve their social status
Emotional benefits are associated with the customer’s experience of
Emotional benefits
emotional states when they buy or use a company’s products/services
tri th ức Epistemic benefits relate to the ability for the company’s products/services to
Epistemic benefits arouse feelings of curiosity, novelty and to address the customer’s desire for
knowledge
 CUSTOMER PERCEIVED VALUE – Benefits
less costs
Customer perceived costs ờ ế
th i gian tìm ki m, ch ờ đợi để use
The human experience is such that time is a finite resource. For any action we
Time thực tế/cảm nhận take, we cannot undertake another at the exact same time. This means that time is
precious. Indeed, customers are often willing to pay premium prices for convenience.
Emotional costs Cognitive effort (stressful and frustrating,…) that consumers often wish to avoid

Physical costs Customers may also need to exert significant physical effort when making a purchase

Customers may perceive risks when making a purchase or using the product,
Perceived risk particularly those related to performance, physical, financial, social, and psychological
factors
Adaption or switching Often, incorporating new goods and services into a solution involves costs in terms of
costs reconfiguring existing assets
 CUSTOMER PERCEIVED VALUE – Goal
achievement/non-achievement
An alternative way to think about customer perceived value is in terms of goal achievement.
When customers buy a product, they do so to address a need or a want -> goal.
Whether the customer succeeds in achieving their goal or not influences their perceptions.
 CUSTOMER PERCEIVED VALUE – Goal
achievement/non-achievement

Goal
• High customer perceived value
achievement
Goal achievement/ non-achievement
perspective is complementary to the
• Neutral customer perceived benefits less costs approach to
Partial goal
achievement
value understanding customer perceived
value.

Goal non-
• Low customer perceived value
achievement
 CUSTOMER PERCEIVED VALUE – other conceptualisations

Zeithaml’s Four Value Perspectives Expanded View of Value

▪ Value as Low Price ▪ Functional Value: price savings, service
▪ Value as Delivering What the Customer excellence, time efficiency
Wants ▪ Hedonic/Affective Value: pleasure,
▪ Value as Quality–Price Ratio amusement, escape, entertainment
▪ Value as Give–Get Ratio (benefits vs.
sacrifices)

Holbrook’s
typology of
consumer value
 When do customers experience value?

Customer-
Value-in-exchange Value-in-use
experienced value

• Value is realized during • Value emerges when • Combines value-in-

a transaction — usually customers use or exchange and value-in-
money for goods, or in interact with a product. use to reflect total
bartering. • Considers broader customer experience
• Emphasizes product customer experience (CX).
features, price, and the over time, including • Value isn't just the
moment of exchange. changing contexts. purchase — it's found
• Commonly used in • Suggests goods have before, during, and after
business, but overlooks no inherent value until use
long-term relationships. consumed or utilized
 COMMUNICATING AND DELIVERING CUSTOMER
PERCEIVED VALUE - The value proposition
The role of the brand
The company’s brand is the most instrumental device when conveying a value proposition. A
brand is any name, design, style, words, or symbols that distinguish a product from its
competitors.
Brands reduce transaction costs by clearly identifying the value proposition and underwriting
the quality of the goods or services.
Customers obtain brand knowledge from experience, word-of-mouth, online brand
communities or social media, or marketer-controlled communication. Brands represent this
information in the customer’s mind. Brands are important devices that help set customer
expectations and therefore shape customer perceptions
 COMMUNICATING AND DELIVERING CUSTOMER
PERCEIVED VALUE - The value proposition
The marketing mix
Product

Process Price
The
marketing
mix
Promoti
People
on

Place
COMMUNICATING AND DELIVERING CUSTOMER
PERCEIVED VALUE - The value proposition
Marketing mix – Value from products (and services)
❖ Companies may make products, but customers do not buy products.
Customers buy solutions to their problems. They buy benefits, or, better said,
they buy the expectation of benefits
❖ 3 levels on the ‘product’: The core product, the enabling product, the
augmented product
❖ Source of product-based value: Product innovation, incremental benefits,
product-service bundling, branding
COMMUNICATING AND DELIVERING CUSTOMER
PERCEIVED VALUE - The value proposition
Marketing mix – Value from products (and services)

Product and service

Incremental benefits Product-service bundling
innovation
• Most new products are • Adding new features or • Combining goods and
improvements or cost- emotional appeal enhances services into one offer
based modifications of perceived value. simplifies value delivery.
existing ones. • Repositioning products can • Adjusting bundle elements
• Breakthrough inventions align them with new changes the customer
generate significant leaps customer segments. value equation
in perceived customer
value.
• Innovation opens up new
ways for customers to
realize value.
COMMUNICATING AND DELIVERING CUSTOMER
PERCEIVED VALUE - The value proposition

Marketing mix – Value from products (and services)

❖ A service is a performance or act performed for a customer. Service is an
important part of many companies’ value propositions.
❖ Companies wishing to enhance customer-perceived value through service
improvement need to understand that their efforts should be focused on the
service elements that are important to customers and where current service
performance is poor.
COMMUNICATING AND DELIVERING CUSTOMER
PERCEIVED VALUE - The value proposition
Value from processes
A business process is set of activities performed by people and/or technology
in order to achieve a desired outcome.
Xerox’s 14 key business processes
 COMMUNICATING AND DELIVERING CUSTOMER
PERCEIVED VALUE - The value proposition
Value from processes - complaints management process
❖ A successful complaints handling process enables companies to capture
customer complaints before customers start spreading negative word-of-mouth or
take their business elsewhere.
❖ Research suggests that negative word-of-mouth can be very influential. Up to
two-thirds of customers who are dissatisfied do not complain to the organisation.
They may, however, complain to their social networks.
❖ Unhappy customers are likely to tell twice as many people about their experience
than customers with a positive experience.
 DISCUSSION
Why don’t unhappy customers complain?
Why do companies need to focus on managing customer complaints?
How can companied improve complaints management process?
 COMMUNICATING AND DELIVERING CUSTOMER
PERCEIVED VALUE - The value proposition

Value from people

In CRM, customer contact roles are critical. These boundary-spanning
positions bridge companies and customers, handling both information
and relationship management. They gather customer insights, maintain
data accuracy, and foster lasting relationships by addressing needs,
resolving issues, and advocating for customer interests.
While front-line staff are vital for perceived value, behind-the-scenes
roles also contribute meaningfully to customer outcomes.
COMMUNICATING AND DELIVERING CUSTOMER
PERCEIVED VALUE - The value proposition
Value from physical evidence
Physical evidence consists of the tangible facilities, equipment and materials
that companies use to communicate value to customers
Physical evidence includes a company’s premises, and their internal and
external environment, print materials, websites, apps, corporate uniforms and
vehicle live
 COMMUNICATING AND DELIVERING CUSTOMER
PERCEIVED VALUE - The value proposition
Value from promotions (and communications)
Companies now deliver greater customer-perceived value through advanced
communication and promotional tools. Unlike the traditional one-way
communication (e.g., advertising, PR, and sales promotions), today’s technology
enables multilateral interactions—between companies, customers, and peers—via
social media, chat, email, and messaging.
 COMMUNICATING AND DELIVERING CUSTOMER
PERCEIVED VALUE - The value proposition
Value from promotions (and communications)
Three key processes enhance this value:
▪ Disintermediation: Companies can now bypass traditional media using direct-to-
customer channels (e.g., email, SMS), fostering immediate two-way
communication.
▪ Personalisation: CRM and data analytics allow tailored messaging, offers, and
customer service scripts, improving relevance and response rates.
▪ Interactivity: Digital tools—like email and webforms—enable engaging, if not real-
time, dialogue with customers, making service more responsive and humanized.
 COMMUNICATING AND DELIVERING CUSTOMER
PERCEIVED VALUE - The value proposition
Value from place
Distribution adds value by ensuring products and services reach customers when
and where they want them.
However, in industries like hospitality and entertainment, value stems more from
experiences than convenience. Elements like atmosphere, service quality, and
surroundings shape emotional and social benefits—for example, a restaurant’s
ambience and scenic views enhance dining experiences.
In manufacturing, "place" is about timing and precision.
 THE COMPANY’S OPERATIONS – CHOOSING
THE RIGHT PATH
Successful companies focus on excellence in one of three approaches for value creation:
operational excellence, product leadership, or customer intimacy.
▪ Operational Excellence Focuses on delivering reliable products or services at competitive
prices with minimal customer effort.
▪ Product Leadership Aims to offer the most advanced or superior product, service, or
experience.
▪ Customer Intimacy Builds deep relationships by tailoring offerings to individual customer
needs.
 THE COMPANY’S OPERATIONS – CHOOSING THE RIGHT PATH
Customer Intimacy – Customisation
Customisation stems from understanding individual customer needs and tailoring value propositions
accordingly. CRM systems play a vital role by collecting and analysing customer data to support
precise customisation.
Challenges: Customisation often suits firms with few but powerful customers. It can be costly,
disrupting economies of scale and requiring new suppliers, systems, or business models.
To guide customisation decisions, CRM practitioners must ask:
▪ Do customers want customised offerings?
▪ How much customisation is desirable?
▪ Will they pay a premium for it?
▪ How can local manufacturing enhance customisation?
 Types of mass customisation
Mass Customisation This approach scales tailored value delivery using flexible systems. It
balances efficiency and personalisation—ranging from simple match-to-order to co-designed
engineer-to-order solutions.
Match-to-order/ locate-to- • Selection of existing standard products or services
order to match customer requirements

• Bundling of existing products and services to suit

Bundle-to-order customer requirements

• Assembly of products or services from existing

Assemble-to-order standardised components or processes

Make-to-order • Manufacture of customised products including

components

Engineer-to-order
• Customer co-designs products or services which
are then made-to-order