Consumer value is a marketing and business concept that attempts to analyze the satisfaction received by a customer from a purchase. More importantly, it tries to analyze the likelihood that the consumer will become a repeat customer providing ongoing business for the firm. Businesses analyze customer value in an attempt to solidify a customer base, study product performance and to market the product more effectively.
Consumer value is one of the latest ways in which marketers have sought to analyze customer satisfaction. Customer satisfaction is important because it leads to repeat purchases. Customer satisfaction is especially important when the market is saturated. In those situations, growth may only be possible through taking market share from competitors. Further, when consumers perceive consumer value to be high, they will spread the reputation of the firm through word of mouth, which can lead to more sales.
Purchase Behavior and Loyalty
Loyal customers are an important part of business in many industries. Several studies have suggested that businesses can use consumer value to improve business margins. Applied marketing literature indicates that there are high expectations for loyalty-building strategies.
Origins of Customer Satisfaction
The expectations-confirmation theory of customer satisfaction says that customer satisfaction concerning a product is based on the consumer's expectations for that product, in addition to the perceived performance of the product. Analysis of consumer value attempts to measure the consumer's satisfaction. Methods include surveys concerning the satisfaction and/or disconfirmation of the consumer. Disconfirmation occurs when customer's expectations differ from what the product delivers. Negative disconfirmation means the product did not meet expectations. Positive disconfirmation means the expectations were exceeded.
Relationship-Building Models of Satisfaction
The expectations-confirmation model is one model for estimating consumer value. Other models consider other factors besides customer response to a completed transaction. Some models seek to analyze consumer value by using relationship-building models. Under relationship-building models, customer satisfaction is based on the consumer's judgment of the business, not the specific transaction or product. These relationship-based models examine other factors outside consumer's feelings about the product, such as the firm's customer service, product line, growth rate or supplier flexibility.
Purpose of Studying Consumer Value
Using information about consumer value and the way consumers perceive a business and its products, marketers can try to increase sales and encourage repeat business. Further, consumer value may be of use for business managers in determining the market structure. With more detailed knowledge of the characteristics of the market, businesses can work to expand product-market boundaries or manipulate prices to increase profits.