price vs value
DESCRIPTION
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Price CustomersPrice CustomersOROR
Value CustomersValue Customers
Price CustomersPrice CustomersOROR
Value CustomersValue Customers
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Author:Subir GhoshPresident – Aegis Global AcademyAn Essar Enterprisewww.aegisglobalacademy.com
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Definitions
• Price = The money the buyer must give to the seller as part of the purchase agreement
• Value = Consumption value + Transaction value
Classical definition of economic value• Economic value =
Reference value(price of best alternative) +
Differentiation value(difference-ve/+ve with best alternative)
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How do Consumers Process Value
• Basically along 3 dimensions
Economic Dimension(Price cheap/expensive/ Fair)
Functional Dimension(Various product features)
Emotional Dimension(Reassurance/ Status)
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How do Firms Deliver Value
CustomizationProduct customization
Communication customizationFeature customization
InnovationNew Products, New features, Improved features, Innovation communication
StandardizationMass productionInventory holding level
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Types of Goods and Services
Necessities Routine Daily Needs
Emergency Sudden/ Time bound need
Convenience Goods Free up Time
Indulgence Goods Status/ Pleasure
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Consumer Segmentation
Price BuyersHigh
Pain of Price
LowConvenience Buyer Relationship Buyer
Value Ascribed to DifferentiationLow High
Value buyers
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Types of Consumers
Price Buyers Price Buyers Lowest price with Minimum level of acceptable quality
Convenience Buyers Convenience Buyers Buy what is Easily or readily available
Value Buyers Value Buyers Spend time studying what Alternatives are available , willing to pay price if benefits are adequate
Relationship Buyers Relationship Buyers Stick to Preferred Brands as long as the price differentials are Reasonable.
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Price Vs Value
Conclusion
•Insidious and Anomalous Comparison
•Customers Display multiple buying personalities depending on type of goods
•Depending on Occasion of Purchase
•Depending on place of purchase
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Let’s begin…