Customer Value Essay

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| | Customer Value: A Summary of Suggestions Based on Class Reading In an increasingly customer-oriented business world, it is important for businesses to maximize, within reason, the customer’s perceived value, not only to retain existing customers, but also to attract new ones. Customer value is the difference between the benefits a buyer receives from a product and the costs of attaining the product. There are a variety of ways to increase customer value, but all focus on either increasing the benefit, or decreasing the cost, to the customer. Before action can be taken to increase customer value, a company must determine precisely what changes should be made. A customer value analysis can help indicate what attributes or benefits which customers value or believe need improvement. The typical formula for such an analysis involves identifying what, exactly, customers value in a product or service, ascertaining and quantifying the importance of various attributes or benefits, assessment of a company’s and competitors performance on what customers(overall and in specific groups) value, and measuring customer value of a period of time (p. 118). After a company identifies the most important aspects of their product, or the areas that require improvement, then it can set out to initiate changes that will increase customer value. Customers typically determine the value of a product or service by weighing the total costs and total benefits that the product offers. The basic philosophy behind increasing customer value is to positively widen the gap between customer’s perceived benefits and perceived costs. Increasing value, then, can be achieved through two

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