Perceived Value of Products

Enhancing the marketing effort means increasing the value that the customer perceives in the product or service offered. Since the customer determines value, the customer is where organizations should start when considering how to improve the perceived value.

The approach that an organization takes for perceived value depends on the nature of the product or service offered. The chart below illustrates how three different products have distinct combinations of characteristics that have low, medium or high impact on customers’ purchasing decisions. For example, the most influential characteristics of diamonds are design and prestige. Customers that value design and prestige are more likely to buy diamonds that those who place more value on different product characteristics such as function or utility.

The Impact of Different Characteristics on Purchase Decisions

Once marketers have researched the motivations and values of customers in a specific international market, the next step is to adapt what they sell and how they sell it to match their preferences. Enhancing value can mean changing the product to give it new features or a different design. In other cases, it can mean changing how the product is sold.

Want to learn more about planning and implementing marketing strategies? Check out the FITTskills Marketing Products and Services online workshop!

10 product characteristics and features to highlight to customers

1. Quality: Emphasize the number of satisfied customers or the durability of the service/product. Offer warranties or after-sales service to demonstrate that the organization stands behind the service/product.
2. Functionality: Inform the target market about different ways of using the product. A campaign for orange juice argued, “It’s not just for breakfast anymore”.
3. Design: New packaging or different colours may satisfy this concern. Alternatively, the organization may need to modify the appearance of the product.
4. Prestige: Sell the product at a high price through an exclusive retail outlet. Emphasize the intelligence or taste of people who buy the product.
5. Safety/security: Emphasize that the product conforms to health or safety standards or that it has performed better than the competition on tests.
6. Timely delivery: Design your distribution chain so that the product always arrives when it “absolutely, positively has to be there”.
7. Ease of assembly or maintenance: Perform partial assembly before the sale, provide written instructions with the product and offer to help purchasers with assembly.
8. Delivery to a specific location: Develop a delivery system that brings the product where the customer wants it. A key value for pizza restaurants is the ability to bring the product to the customer’s home.
9. Ambiance at the point of purchase: Sell your product in a fashionable boutique setting.
10. Price: Use a big-box store format to move huge volumes while
    incurring minimal overheads.

Perceived Value of Services

The intangible nature of services can make them more difficult to sell. Service providers need to understand how customers assess services. One way marketers can do this is to understand the relationship between perceptions and expectations. This relationship has been described as:

Satisfaction = Perceived Value – Expectation

If customers perceive that an experience has exceeded their expectations, the customer is satisfied. If customers perceive that an experience has not met their expectations, then the customer is dissatisfied.

Not all customers are the same. Their culture, life experiences, age and other characteristics cause great variation in perceptions and expectations. For service providers, this means that they need to understand customer expectations in the target market. Understanding expectations allows organizations to set a benchmark for perceived value that will result in customer satisfaction.

Although each customer’s perception of value is unique, aspects of perception can be objectified and business strategies used to address issues.

For example, if customers consistently stand in line to wait for service, then they would likely perceive shorter waiting times as valuable. The service provider could influence the perceived value of their service by adding additional staff to reduce waiting times. However, customers vary and what might be considered a short wait for some may be too long for others.

The numerator of this equation includes what the customer receives from experiencing the service. Results are the outcomes, what the customer hopes to obtain from using the service. The process refers to the factors of delivery, e.g. wait times, information provided, the interaction. Emotional value is what the customer feels about the service, brand or the event when experiencing it.

The denominator is the cost of the service to the customer. In addition to the monetary cost of the service paid by the customer, there is also the cost of any inconvenience, such as wait times, parking or delays. Uncertainties are the cost of the unknown—what the customer is unsure of in relation to the service—and they can cause anxiety.

Service providers can influence these factors using business strategies. For example, costs can be controlled to ensure prices are reasonable for the customer, contingency plans can be put in place for inconveniences, and money-back guarantees offered to reduce uncertainty. Meeting the customer’s expectations for results and process also increases the emotional value of the service.

The chart below shows the factors that contribute to the benefits and costs that influence how a customer views the value of a service. Ideally, the “Total Customer Benefits” outweigh the “Total Customer Costs”, creating an overall positive perception of the service.

Customer’s Perceived Value of Service

By defining the customer, assessing customer satisfaction and determining the perceived value of the service, the service provider can identify the selling points for the service being offered. This information helps service providers adapt and customize their services and develop their value propositions.

The post Improve the perceived value of your products or services in target markets appeared first on Trade Ready.

Service providers often deal with confidential and proprietary customer information. Depending on the type of services being offered, the ability to maintain the confidence of customers is essential to a service provider’s competitive advantage and reputation.

It is also important to ensure information security and confidentiality to prevent breach of contract that could result in litigation procedures from customers.

Service providers need to ensure that contracts or service agreements clearly specify these 8 key aspects:

1. Security measures to protect customer’s private and proprietary information.

For example, service providers must work and store all private customer information in a secure online site.

2. Licence agreements for third-party intellectual property being used by the service provider and the limitations of those agreements for customers.

For example, if a service provider has a licence to use Microsoft or Adobe applications to provide their service, it must be sure what the conditions of those agreements are, especially if the applications are accessed by customers.

3. Licence agreements with third-party intellectual property being used by customers and the limitation of those agreements with service providers.

For example, service providers must be aware of the agreements that customers have with any other service providers to ensure they are legally allowed to access and use any programs their customers use.

4. Allowable use of licensed intellectual property and the number of licences permitted (e.g. software programs) over the lifetime of the contract.

For service providers using proprietary applications, it is important to stipulate what the customers or licensees are allowed to use the applications for, how many can use the application at any given time, and for how long.

Interested in a broader look at adapting your business to an international market? Then the FITTskills Products and Services for a Global Market course is for you!

5. Copyright ownership over material produced by the service provider for the customer.

This could include statistics, data and any information that has been produced based on proprietary information. For example, a consultant may produce a report for a customer that is copyright protected and owned by the customer, or an educational consultant might provide workbooks for a course that are property of, and copyright protected by, the service provider.

6. Copyright ownership over material produced collaboratively as an outcome of the service contract with the customer and the service provider.

This is especially important to stipulate in contracts where research, development and testing services are being provided. The share of ownership needs to be negotiated when there are potentially profitable outcomes.

7. Share of patent protection for processes or materials produced collaboratively as an outcome of the service contract with the customer and the service provider.

This is generally negotiated in advance where there are potentially profitable outcomes.

8. Sales and territorial restrictions for service licensees.

Licensing agreements can differ depending on market conditions in other jurisdictions and potential licensees. These agreements are important to mitigate conflict between licence holders.

Whether a service provider patents their service, or plans to operate under the open source philosophy, it is necessary to have a complete understanding of their service, the mode of delivery, their target markets, their competition, the regulatory environment and their intellectual assets in order to make decisions about how to best protect intellectual assets and customers in target markets.

The post 8 ways you should be protecting your service-based customers appeared first on Trade Ready.