From the choices usually available in a marketplace, customers determine which supplier offers the best value. Different customers have different needs, different wants, different desires. Hence, multiple competitors may well exist in the same marketspace. However, seldom do competitors have the same market share. Typically, one company wins the vote for "best value" from a plurality (or majority) of potential customers
In a nutshell, customers determine value by which supplier offers the best benefits at the optimal price.
Value = Benefits/Price
Great value, super bargain!: the benefits greatly exceed the price ... Value = ++
Good value: the benefits outweigh the price ... Value = +
Fair value: the benefits match the price ... Value = OK
Bad value: the price outweighs the benefits ... Value = -
Rip off!: the price greatly exceeds the benefits ... Value = --
To increase value, either add benefits or decrease price.
The "quick and dirty" way to enhance value is to have a "Sale!" ... "50% off, limited time only!"
Customers make their buy decisions primarily based on their perceptions of value, comparing the options offered from several sources. How many sources are included is a customer decision, and not always entirely logical. One of the key values of a brand is to make the buying decision easy for the customer ... "I'll just by an Apple computer rather than explore other options."
Some benefits are determined objectively ... fit, form, function, feel, features, performance ...
Some benefits are determined subjectively ... color, smell, brand name, shape ...
Some aspects of the price are direct ... the cost ...
Some aspects of the price are indirect ... warranty, convenience of purchase ...
Ways to deliver value to a customer:
- Product: performance, quality, features, brand, selection ...
- Price: fair, visible, consistent, reasonable
- Access: convenient, location, nearby, at-hand
- Service: ordering, delivery, return, check-out
- Experience: emotional, respect, ambiance, fun, intimacy ...
- Process: ways of doing business that are consistent and comfortable
Accounting Advertising Advisor Analysis Balance Sheet Barriers to Entry Beachhead Benefits Better Books Brainstorming Brainwriting Budget Business Flow Business Model Cash Flow Commercialization Communications Competition Competitive Advantage Consultant Corporate Entrepreneurship Creativity Critical Success Factor Culture Customer Decisions Deploy Design Develop Differentiation DXpedition Earn Education Effectiveness Elevator Pitch Entrepreneur Entrepreneurship Environment Evolution Executive Summary Exercise Expertise Failure Finance Financial Objectives Flowchart Focus Funding GizmoGadget Glossary Habits Healthy Venture Hiring Hypothesis Ideas Ideation Income Statement Industry Industry Research Innovation Innovator Intellectual Property Intrapreneurship Invention Inventory Investor Knowledge Launch Leadership Lean Startup Learning Legal Luck Machines Management Manpower Market Research Marketing Marketing Brochure Material Media Mentor Methods Mindset Mission Mistakes Money Motivation Myths Name Niche Market Operating Agreement Operations Opportunity Passion Patents People Planning Positioning Presentations Price Problems Process Flow Product Development Profit Progress Promotion Prototype Research Resources Return on Investment Roadmap Sales SCAMPER SCORE Scorecard Skills Slides Solution Development Solutions SPLUCK Start-up Stimulation Strategy Structure Success SWOTT Tagline Target Market Team Teamwork Technology Readiness Levels Terminology Thinking Tools Transformation TRL Validation Value Venture Venture Capital Venture Creation Venture Plan Vision Work Worth Writing