Perceived value

Perceived value is the subjective evaluation of a product or service by a customer or potential customer that determines its worth in their eyes. It is the combination of all the features and benefits of a product or service and the customer’s personal perception of the value of those features and benefits. It is a subjective assessment that differs from one customer to another and can change over time. For management, perceived value is important to understand, as it can help to shape product and service offerings, pricing, and marketing campaigns to better meet the needs and wants of customers.

Example of perceived value

• For example, a customer might perceive the value of a laptop computer to be higher if they believe they are getting features and benefits such as a faster processor, a larger hard drive, a better-quality display, and a longer warranty.
• Another example of perceived value is a customer's opinion of the quality of service they received when they visited a store. If they felt that the sales staff were knowledgeable, friendly, and helpful, they may perceive the overall value of the store to be higher than if they felt that the staff was unhelpful or uninterested.
• A third example of perceived value is an individual's opinion of a restaurant. For example, if the food is of high quality and the ambiance is pleasant, the customer may perceive the value of the restaurant to be higher than if the food was of low quality and the atmosphere was unpleasant.

When to use perceived value

Perceived value is an important concept for management to understand, as it can help shape product and service offerings, pricing, and marketing campaigns. It can be used in the following ways:

• To determine the worth of a product or service in the eyes of a customer. By understanding what features and benefits customers value, companies can create products and services that better meet their needs.
• To determine the best pricing for a product or service. Companies can use perceived value to set prices that customers are willing to pay for the features and benefits offered.
• To create effective marketing campaigns. Companies can use perceived value to identify the most important features and benefits of their products and services, and to craft messages that will appeal to customers.
• To improve customer satisfaction. Companies can use perceived value to understand how customers view their products and services, and to make adjustments to better meet customer needs.

Types of perceived value

Perceived value is an important tool for management to shape product and service offerings, pricing, and marketing campaigns to better meet customer needs and wants. There are several types of perceived value, including:

• Functional value: This is the extent to which a product or service meets the customer’s practical needs and expectations. It is the customer’s perception of how well a product or service performs its intended function.
• Emotional value: This is the extent to which a product or service connects with a customer on an emotional level. It is the customer’s perception of how a product or service makes them feel.
• Social value: This is the extent to which a product or service meets the customer’s social needs. It is the customer’s perception of how a product or service fits into their lifestyle and how they interact with others while using it.
• Economic value: This is the extent to which a product or service offers value for money. It is the customer’s perception of the cost-benefit ratio of a product or service.
• Symbolic value: This is the extent to which a product or service is associated with a certain meaning or identity. It is the customer’s perception of how a product or service reflects their personal values, beliefs, and identity.

Advantages of perceived value

Perceived value can be a powerful tool for businesses to use in order to gain an edge over their competitors. The advantages of perceived value include:

• Enhanced Customer Satisfaction: By understanding what customers value in a product or service, businesses can tailor their offerings to meet those needs, leading to increased customer satisfaction.
• Improved Brand Loyalty: When customers perceive value in a product or service, they are more likely to become repeat customers and remain loyal to the brand.
• Increased Profitability: When customers perceive greater value in a product or service, they are more likely to purchase it, leading to increased sales and higher profits.
• Effective Promotion: When companies understand what customers value, they can design more effective promotional campaigns that target those values.
• Improved Customer Retention: By understanding customer needs and wants, businesses can better retain customers by providing them with the value they are seeking.

Limitations of perceived value

Perceived value is a subjective evaluation of a product or service, which can be beneficial for businesses to understand. However, it is not without limitations. The following are some of the limitations of perceived value:

• Perceived value can be difficult to measure accurately, as it is based on individual customer’s perception and preferences, which can change over time.
• It can be difficult to predict how a customer will value a product or service, as their preferences can be unpredictable or hard to predict.
• It can be hard to differentiate between what features and benefits customers value most and how much they value them, as this depends on individual preferences.
• It can be difficult to alter a customer’s perception of value, as it is based on their personal experiences and opinions.
• Perceived value can be difficult to maintain, as customer preferences can change over time.

Other approaches related to perceived value

Perceived value can also be examined from different perspectives. Other approaches related to perceived value include:

• Exchange value - this concept examines how customers view the value of the exchange of money for the product or service. This can help to determine the price that the customer is willing to pay for the product or service.
• Relational value - this concept looks at the value of the relationship between the customer and the company. It can include the customer’s perceptions of the quality of customer service, the reliability of the product or service, and the customer’s overall satisfaction with their relationship with the company.
• Utilitarian value - this concept examines the value of the product or service based on its usefulness and functionality. It looks at how well the product or service meets the customer’s needs and expectations.
• Emotional value - this concept looks at the impact of the product or service on the customer’s emotions. It can include the customer’s feelings of satisfaction, pleasure, pride, or loyalty that the product or service may evoke.

In summary, perceived value is an important concept for management to understand, as it can shape product and service offerings, pricing, and marketing campaigns to better meet the needs and wants of customers. Other approaches related to perceived value include exchange value, relational value, utilitarian value, and emotional value. Each of these approaches helps to examine the customer’s perception of the worth of the product or service from different perspectives.

Perceived value — recommended articles

Customer perceived value — Brand value chain — Perceived quality — Luxury item — Segmentation and targeting — Customer loyalty — Value to consumers — Brand equity measure — Brand promise

References

• Sánchez-Fernández, R., & Iniesta-Bonillo, M. Á. (2007). The concept of perceived value: a systematic review of the research. Marketing theory, 7(4), 427-451.