29. Value and Satisfaction

In terms of marketing, the product or offering will be successful if it delivers value and satisfaction to the target buyer. The buyer chooses between different offerings on the basis of which is perceived to deliver the most value.

We define value as a ratio between what the customer gets and what he gives. The customer gets benefits and assumes costs, as shown in this equation:

Based on this equation, the marketer can increase the value of the customer offering by (1) raising benefits, (2) reducing costs, (3) raising benefits and reducing costs, (4) raising benefits by more than the raise in costs, or (5) lowering benefits by less than the reduction in costs. A customer choosing between two value offerings, V1 and V2, will examine the ratio V1/V2. She will favor V1 if the ratio is larger than one; she will favor V2 if the ratio is smaller than one; and she will be indifferent if the ratio equals one.

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