CUSTOMER VALUE

ANALYSIS
Nature of Customer Value Analysis

Customer Value Analysis (CVA)

 It refers to a research method that is used to identify how an organization is
perceived by consumers of an organization and
their competitors.
 CVA is extremely important because it allows an organization
to gauge how they are judged in comparison to their industry rivals.
 It is used in two main ways
 As an integral component of market segmentation as the central criteria for
selecting profitable market segments
 Used on a continuous basis to monitor the firm’s foundation of competitive
advantage
Attribute/Cost Models of Customer Value

Product
Attribute

Service Attribute
Perceived Benefits Expected
Customer
Value
Perceived Benefits
Transaction Cost

Life Cycle Cost

Risk
Attribute/Cost Models of Customer Value

Expected Benefits
 Presale attributes – include all tangible product and search
attributes that the customer can evaluate before the purchase.
 Postsale attributes – include the often intangible product and
service attributes that can only be evaluated postsale after
using the product or service for some time.
 Extended postsale attributes – include those products and services
for which an evaluation of value can only be determined after
extended usage.
Service Quality (SERVQUAL) Model
CONSUMER
Word-of-Mouth
Personal Needs Past Experience
Communications

Expected Service

Gap 5
Perceived Service

MARKETER Service Delivery Expected

Gap 4 Customer
(including pre- and post-
contacts Value
Gap 3
Gap 1 Translation of
Perceptions into
Service Quality Specs
Gap 2
Management
Perceptions of
Consumer Experience
Service Quality (SERVQUAL) Model
Determinants of service quality
 Reliability – consistency of performance and dependability
 Responsiveness – employees’ availability to provide service
 Competence – employees’ possession of the required skills and
knowledge to capably perform the service
 Access – approachability and ease of customer contact with employees
 Courtesy – attitudes such as politeness, respect, consideration and
friendliness of contact personnel
 Communication – two-way, symmetric dialogue that keeps customers
information in a language they can understand and employees listening
to the customers
 Credibility – traits and attitudes such as trustworthiness, believability
and honesty
Service Quality (SERVQUAL) Model
Determinants of service quality
 Security – customers’ freedom from danger, risk or doubt
 Understanding/Knowing the Customer – the range and nature by
which employees make the effort to understand customers’ needs
 Tangibles – physical evidence of the service
Goal/Motivation Model of Customer Value

DESIRED CUSTOMER VALUE CUSTOMER SATISFACTION

WITH RECEIVED VALUE

Customers’ goals and

purposes Goal-based satisfaction

Desired consequences Consequence-based satisfaction

In use situations

Desired product
attributes and attribute Attribute-based satisfaction
performance
Goal/Motivation Model of Customer Value
 It begins where attribute/cost models end.
 It focuses more on the motivations for customer purchases as
opposed to attribute models that analyze only the manifestations
of these motivations.
 It is guided by the following principles
o Customer value (product quality, service quality, and price) is
defined by the customer
o Customer value is defined relative to rival offerings
o Customer value will change over time
o Customer value is created throughout the entire value chain
o Customer value is a cooperative effort involving everyone in the
firm
Goal/Motivation Model of Customer Value
 It begins where attribute/cost models end.
 It focuses more on the motivations for customer purchases as
opposed to attribute models that analyze only the manifestations
of these motivations.
 It is guided by the following principles
o Customer value (product quality, service quality, and price) is
defined by the customer
o Customer value is defined relative to rival offerings
o Customer value will change over time
o Customer value is created throughout the entire value chain
o Customer value is a cooperative effort involving everyone in the
firm
Major stages in Customer Value Analysis
 Customer Intimacy
o Customer surveys – this involves mail or telephone interviews of
current or potential customers to measure the firm’s effectiveness in
delivering value at key product and service quality attributes
o Focus panel groups – this presents a prototype of a planned product
or service to a group of target customers and asks for their feedback
o Conjoint analysis – this present focus groups with several different
options, each incorporating a different set of quality attributes.
o Price sensitivity analysis – this is similar to conjoint analysis except
that quality attributes and features are compared to price and vice
versa.
o Motivation analysis – this is best performed through one-on-one
interviews, motivation analysis seeks to uncover the underlying
psychological reasons driving customer purchase criteria.
Major stages in Customer Value Analysis
 Customer Intimacy
o Unmet needs analysis – best performed through in-depth
personal interviews which seeks to define motivations,
needs, or attributes not currently satisfied by existing
offerings.
o Lead user interviews – it focuses on lead users who are
excellent partners in new product development and most
receptive to a mutual search for solutions.
Major stages in Customer Value Analysis
 Formal Customer Value Analysis
o Market perceived quality profile – this examines the key
purchase criteria of customers for the product or service under
analysis
o Market perceived price profile – this is similar to market
perceived quality profile except that customer perception of
total cost of ownership is used instead of perceived quality
parameters.
o Win/loss analysis – this analyzes the core reasons for recent
gains or losses n market share
o What/who matrix – it is a tactical implementation tool designed
to track progress toward meeting the firm’s customer value
improvement objectives.
Major stages in Customer Value Analysis
 Strategic management of customer value
o After performing step 1 and step 2, the firm will start
implementing the customer value analysis.
o After having completed the customer value analysis, the firm
will determine which product and service attributes provide
superior customer value.