Customer Value Analysis - Valuation of Goods and Services by Customers

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Value is quality as defined by the customer, who evaluates that quality in the context of price
relative to competing products.


One way of analyzing value - price combinations for products.

A market-perceived quality profile is developed by identifying the key buying factors for the
product, then asking respondents to weight the attributes by distributing 100 points between
them. Respondents then rate on a 10-point scale how well the client's product and those of its
competitors deliver on each quality attribute. The ratio between the two scores is determined, and
that ratio is multiplied by the weight established for that particular attribute. The resulting weight
times the ratio score for each attribute are used to determine the market-perceived quality ratio for
each firm serving the market.

Similarly, a market-perceived price profile is created. The two profiles form the X and Y axes
of a value map on which each competitor's quality ratio is plotted. Dissecting the map diagonally
is the fair-value line, where quality is balanced against price. Companies that fall in the upper
right quadrant of the map and below the fair-value line are in the best position to increase share
while maintaining price.

The Value of Customer Value Analysis: Customer value analysis becomes the starting point in marketing research


By: Higgins, K. T.. In: MARKETING RESEARCH. 10(4):39-44; United States: AMERICAN MARKETING ASSOCIATION, 1999.