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Value in marketing, also known as customer-perceived value, is the difference between a prospective customer's evaluation of the benefits and costs of one product when compared with others. Value may also be expressed as a straightforward relationship between perceived benefits and perceived costs: Value = Benefits / Cost.
The basic underlying concept of value in marketing is human needs. The basic human needs may include food, shelter, belonging, love, and self expression. Both culture and individual personality shape human needs in what is known as wants. When wants are backed by buying power, they become demands.
With a consumers wants and resources (financial ability), they demand products and services with benefits that add up to the most value and satisfaction.
The four types of value include: functional value, monetary value, social value, and psychological value. The sources of value are not equally important to all consumers. How important a value is, depends on the consumer and the purchase. Values should always be defined through the "eyes" of the consumer.
Functional Value: This type of value is what an offer does, it's the solution an offer provides to the customer.
Monetary Value: This is where the function of the price paid is relative to an offerings perceived worth. This value invites a trade-off between other values and monetary costs.
Social Value: The extent to which owning a product or engaging in a service allows the consumer to connect with others.
Psychological Value: The extent to which a product allows consumers to express themselves or feel better.
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