Value-value can be defined as the extent to which a customer perceives a certain good or service to meet his or her needs and is measured to the willingness of the customer to pay for the good or the service.
Value-in-exchange is the number of services or goods that one can obtain from a market in exchange for a certain commodity. Value-in-exchange is the cost of a particular service or good which may be sold or bought from a market. On the other hand, value-in-use is the ability of a good or a service to satisfy a want or need. In a simpler form, value-in-use is the satisfaction that a consumer obtains from a service or a good (Sheth, J.N. and Uslay, C., 2007 P 302-307).
An example of value-in-use is in order to quench our thirst we need water, without water our lives would be unbearable. The value-in-use of water is the quality. In value-in-exchange- if we can obtain one liter of water for two oranges, then we can say that the value of one liter of water is equal to two oranges.
The concept of value-in-use and value-in-exchange is a vital tool in product positioning and offering of services. In the market, customers make use of value to assess the offering's worth in contrast to the competitive offering. As a seller, setting a consumer-oriented pricing entails an understanding of the buyer's benefit wants and setting a price constant to the value. The disadvantage of the two is that it is difficult to understand the value each consumer holds items or services as their needs and wants vary greatly.
Consumer behavior is a study that is concerned with individuals, groups and organizations and the summation of the activities related to the purchase, utilization, and discarding of goods and services. The study includes the mental, emotional, and behavioral response of a consumer that precedes these actions (Solomon, M.R., Dahl, D.W., White, K., Zaichkowsky, J.L. and Polegato, R., 2014 Vol 10). Some consumer theories include: the Marshallian Economic Theory- Marshall proposed that consumers purchase goods and services basing their judgment on which good or service provides the highest personal satisfaction. The Psychoanalytic Theory- the theory proposes that consumers are unable to understand their motivation which is as a result of psychological factors. The unconscious mind is majorly comprised of urges and desires which may cause significant guilt if they surface and thus, people tend to suppress the desires. The Pavlovian Theory suggests the behavior of human is as a result of conditioned responses.
The consumer product acquisition process is a simple procedure that involves consumers recognizing their problems, searching for information concerning the problems, evaluating all the alternatives available, making the purchase decision, making the purchase and finally conducting a post-purchase evaluation. Under the application of Maslow's hierarchy of needs, the physiological needs represent those customers' needs that are basic, they include food and water. For instance, customers should be encouraged to meet their physiological needs to satisfy their survival needs. Safety needs represent wants such as personal security and health. These wants arise after the physiological needs are met. In marketing, an insurance company guaranteeing safety, of an individual after an accident meets the needs of the individual. Following the safety needs, is love and belonging needs which focuses on interpersonal relations. In marketing, building a brand that is community-based allows consumers to have a sense of belonging towards the product. Next in the hierarchy is esteem needs which is the want for status and recognition. The need comes once all these four needs are met. The self-discrepancy theory proposes that consumers compare themselves to internalized principles known as self-guides. The different demonstration of the self may be contradictory and can lead to emotional uneasiness. People are stirred to the decrease the gap to remove the disparity in self-guides. The consumer experience theory entails that if a consumer feels a commodity meet his or her needs, they are likely to develop a liking for that particular commodity.
Consumer market entails buyers who purchase commodities for consumption rather than resale. Business market segmentation criteria are dividing the market on the base upon which an individual perceives the value and benefits customers gain from a good or a service. The criteria for customer segmentation are geographic segmentation and demographic segmentation. Under business segmentation, there is occasion segmentation which divides consumers on the basis of the occasions there are likely to but commodities and psychographic segmentation which segments the business market in terms of social class, personality, and lifestyle.
Marketing research provides important information that is used to assist in the decision making process. The approaches used in market research include primary market research, secondary market research, qualitative research, and quantitative research. The STP process comprises of segmentation, targeting, and positioning. Segmentation entails splitting the market into smaller portions that have similar needs for the purpose of choosing the target market, targeting refers to selecting a suitable market segment and positioning offering a competitive product to the market (Do Paco, A. and Raposo, M., 2009 P 364-379).
The porter's generic competitive strategy subdivides competitive strategy into cost leadership, differentiation, cost focus, and differentiation focus. The source of competitive advantage under cost leadership strategy involves gaining a competitive advantage due to cost. The advantage is achieved by reducing the costs to increase the profit margin and charging lower prices to attain a larger market share. Under differentiation strategy involves making a good to be different and attractive compared to your competitor. This is achieved through conducting market research and possessing the ability to deliver quality products and services. Under the focus strategy, a company focuses on one specific market and understands the market dynamics and needs. The company then comes up with a cost effective product that meets these needs. The Bowman's and D'Aveini's market-facing strategy focuses on gaining marketing advantage by analysing competitive strategies that are the most effective for the market. The market-facing strategy is based on the principle that competitive advantage is achieved when consumers' needs and wants are met.
Radical innovation is aninvention that supplants an already active business model. Incremental innovations are series of small upgrades that are made to an existing product or service by a company. Component innovations are the results of modular changes in the system that do not alter the system's design. Architectural innovations are modifications on the overall system. All these innovations are necessary for meeting the dynamic needs and wants of consumers as well as maintaining the competitive advantage.
Licensing is the act of obtaining official permission to conduct a business. Franchising is a strategy for business expansion through developing a brand under the company's name. The Turnkey project involves developing a project and later selling it to a consumer once completed. The turnkey projects mostly operate under the order and build principle. The advantages include, the companies have an opportunity to create a lasting impression on consumers thus creating brand identity and loyalty. The companies have an opportunity to perfect their products and services and control over resources. The disadvantage of market entry is that one stomachs the economic challenges of developing a new market. Entering into a market requires a mentor where a company can learn from the mistakes these mentors did and avoid costly mistakes. When venturing into a new market, a company may lack mentors; failure to have a mentor may result in losses due to avoidable mistakes.
Sheth, J.N. and Uslay, C., 2007. Implications of the revised definition of marketing: from exchange to value creation. Journal of Public Policy & Marketing, 26(2), pp.302-307.
Solomon, M.R., Dahl, D.W., White, K., Zaichkowsky, J.L. and Polegato, R., 2014. Consumer behavior: Buying, having, and being (Vol. 10). Pearson.
Do Paco, A. and Raposo, M., 2009. "Green" segmentation: an application to the Portuguese consumer market. Marketing Intelligence & Planning, 27(3), pp.364-379.
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