Customer Value: Analysis of Factors and Strategies for Enhancement

This report delves into the multifaceted concept of customer value, defining it as the incremental benefit a customer derives from a product, influenced by price, quality, and service. It differentiates between desired and perceived value, emphasizing the impact of tangible benefits and actual product performance on customer satisfaction. The literature review explores quality, cost, customer service, and logistics lead time as key determinants of customer value. Quality is linked to product attributes and customer satisfaction, while cost focuses on the perceived value of a product in relation to its price. Customer service is highlighted as crucial for customer retention and business growth, and logistics lead time is examined for its impact on customer experience. The critical reflection underscores the importance of customer service in enhancing product value, especially in competitive markets, and discusses customer satisfaction models. The report concludes by emphasizing the interplay of benefits and costs in determining overall customer value.

Running Head: CUSTOMER VALUE
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Enhancing Customer Value

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Table of Contents
Introduction......................................................................................................................................3
Literature Review............................................................................................................................3
Critical Reflection............................................................................................................................6
References........................................................................................................................................8

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Introduction
Customer Value is defined as the incremental benefit which is derived by a customer through
purchasing a product. The value can be expressed as the difference between the total of tangible
and intangible benefits and the cost of the product. There are three factors, price, quality and
service, which influence the value of a product (Zhang et al., 2017). As the quality and service of
a product increases, its value also increases. On the contrary, when the price of the product
increases without any change in the benefits, the value of a product decreases. The customer
value is categorized into two types-- the desired value and the perceived value. The desired value
indicates the value expected by a customer. On the contrary, the perceived value indicates the
value of a product expected by the customer after considering the cost. The perceived value is
highly dependent on the tangible benefits received by the customer on payment of the cost. The
actual value or the tangible benefits of a product can be realized after consumption of the
product. When the product provides actual value which is higher than the perceived value, the
customer value becomes very high. On the contrary, when the actual value is lower than the
perceived value, the customer value decreases.
Literature Review
Quality—
The concept of customer value indicates that the value of a product depends upon performance.
When purchasing an item, a customer expects some attribute for it. When the attributes are found
in the product, the customer derives value based satisfaction. Enhancing quality of the products
enhances the chance of having the desired attributes as well (Kumar and Reinartz, 2016). From

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this perspective, quality of the product plays a key role in enhancing the customer value. Quality
of the products also ensures that the product would perform in a desired manner in several
consequences. It increases the chance of attaining consequence-based satisfaction among the
customers. Higher customer satisfaction indicates that higher value is being received from the
product (Wu and Li, 2018). When the product has high quality, it becomes able to meet the goals
and purposes of the customers. Under these circumstances, the customers can obtain the goal
based satisfaction. The current discussion indicates that the functionality of the products
improves when its quality improves. In other words, when the quality improves, the received
benefit from it also increases. However, while assessing quality of the products to determine the
value, considering the perspective of the customers is important (Zhang et al., 2017). From the
point of view of the customers, the product quality can be categorized as the perceived product
quality and the expected quality. The perceived quality indicates the level of satisfaction a
customer derives from the product. On the contrary, the expected quality are the attributes the
customers wish to obtain from the product.
Cost-- The perceived value of the product increases when the cost is low. The value of the
product is determined by the cost and the tangible benefits obtained from it. The value of the
product increases when larger tangible benefits are obtained at lower cost (Schwepker Jr and
Ingram, 2016). On the contrary, the customers perceive the value of the products as lower when
they need to pay higher price for it. Therefore, in order to increase the customer value, the
businesses require reducing the cost. The customers consider the cost as a sacrifice from their
part (Zhang, Liang and Wang, 2016). From the perspectives of the customers, the risk of failure
of the product is also considered as the level of sacrifice (Xu Peak, and Prybutok, 2015). While
purchasing the products, the customers consider

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receiving high value on their investment. So, when the customers pay higher price, they expect to
receive higher value. As the expectation of the customers increases, the functionalities of the
products also need to be improved. If the product fails to perform accordingly, the perceived
benefit reduces. It causes reduction of the customer value.
Customer service—
Customer service can be considered as the support an organization offers to the customers. The
customer service is provided before making any purchase or using the products. The additional
assistance offered by an organization ensures that the customers are having an enjoyable and
easy experience.
Offering quality customer service is essential if an organization wants to retain customers and
grow its business (Hsiao, Chang, and Tang, 2016). In the contemporary market, the customer
service is not limited to the traditional support over telephone. Rather, the businesses are
communicating with the organizations in several ways with help of the web, email, message, and
social media (Payne, Frow, and Eggert, 2017). Several companies also enable the customers to
obtain self-service support. With help of such assistances, the customers become able to find
their own solutions whenever needed. In the recent days, the role of customer support is not
providing answers only, but it has been emerged as a key part of the experiences offered to the
customers. The customer service plays a key role to attain the customer satisfaction. When the
businesses offer adequate customer service, the benefits received by the organizations increase.
All the above efforts offered by the business are effective to enhance the amount of benefit
derived from a product without affecting the cost. It, in turn, enhances the customer value.
Logistics lead time—

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The logistics lead time can be described as the sum of all transit time, processing time, and time
spent by a product in the inventory. In other words, the logistics lead time represents the time
which is needed by an item to travel from the supplier, through operations and finally to the end
consumer. The transit time and processing can be expressed in days. Logistics lead time depends
on a number of factors such as the time-efficiency of the suppliers, manufacturers and the
inventory processes (Oh and Kim, 2017). The time to deliver a product to the customers depends
significantly on the logistics lead time. When the lead time reduces, the customers also become
able to get the product faster. The faster services improve the customer experience and so, the
value of the products to them increases (Hapsari, Clemes, and Dean, 2016). However, reduction
of the lead time and the associated increase to the product value depends significantly on the
collaboration between the stakeholders. The businesses need to ensure that all the parties are
giving equal effort to execute the operations efficiently. It, in turn, ensures that the products are
getting delivered to the end users on time.
Critical Reflection
The statement of Porter indicates that the efforts of an organization to assist the customers is
given more value than the acquisition and usage cost. In other words, offering customer service
is more effective to enhance value of a product to the customers than using any other methods.
The importance of customer service can be better understood from the concept of the perceived
value of the products. The perceived value of the product depends on the evaluation of the
customers regarding the performance of the particular product with respect to the peers. Offering
the customer service makes using the product easier for the customers. With help of the
additional assistances, the customers become able to enhance utility of the products. As the

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utility of the products increases, its value also increases. The concept of perceived value is even
more important in the markets where the businesses need to offer the products at competitive
price. In these cases, offering discounts or using any other pricing strategy may not be effective
to get attention of the customers. similarly, bringing variation in the functionality of the products
is difficult when several alternative products are available in the market. In such markets,
presence of the customer service helps an organization to create a distinctive image of its
products among the customers. So, from the perspective of the businesses also, offering the
customer service is more beneficial.
The customer satisfaction model, suggested by Kano, indicates that the satisfaction level of the
customers increases when the product attributes meet their expectations. As evident from the
model, the satisfaction of the customers increases as the attributes of the products also increases.
When the customers find any unexpected attribute in the product, the satisfaction level becomes
higher. When purchasing product, the customers mainly expect presence of the physical
attributes that can enhance functionality of the product. On the contrary, the customer service or
the additional assistance offered by the organization is an unexpected attribute offered to them.
As the customers receive something unexpected, they treat it with more value. The value of a
product is determined by the benefits obtained and the cost. When the customer service is
offered, the benefits obtained by the customers increases. However, the cost of the products
remains same. As an effect, value of the product also increases with offering the customer
service.

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References
Hapsari, R., Clemes, M., and Dean, D., 2016. The mediating role of perceived value on the
relationship between service quality and customer satisfaction: Evidence from Indonesian airline
passengers. Procedia Economics and Finance, 35, 388-395.
Hsiao, C. H., Chang, J. J., and Tang, K. Y, 2016. Exploring the influential factors in continuance
usage of mobile social Apps: Satisfaction, habit, and customer value perspectives. Telematics
and Informatics, 33(2), 342-355.
Kumar, V., and Reinartz, W., 2016. Creating enduring customer value. Journal of
Marketing, 80(6), 36-68.
Oh, H., and Kim, K., 2017. Customer satisfaction, service quality, and customer value: years
2000-2015. International Journal of Contemporary Hospitality Management, 29(1), 2-29.
Payne, A., Frow, P., and Eggert, A., 2017. The customer value proposition: evolution,
development, and application in marketing. Journal of the Academy of Marketing Science, 45(4),
467-489.
Schwepker Jr, C. H., and Ingram, T. N., 2016. Ethical leadership in the salesforce: effects on
salesperson customer orientation, commitment to customer value and job stress. Journal of
Business & Industrial Marketing, 31(7), 914-927.
Wu, Y. L., and Li, E. Y., 2018. Marketing mix, customer value, and customer loyalty in social
commerce: A stimulus-organism-response perspective. Internet Research, 28(1), 74-104.

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Xu, C., Peak, D., and Prybutok, V., 2015. A customer value, satisfaction, and loyalty perspective
of mobile application recommendations. Decision Support Systems, 79, 171-183.
Zhang, H., Liang, X., and Wang, S., 2016. Customer value anticipation, product innovativeness,
and customer lifetime value: The moderating role of advertising strategy. Journal of Business
Research, 69(9), 3725-3730.
Zhang, M., Guo, L., Hu, M., and Liu, W., 2017. Influence of customer engagement with
company social networks on stickiness: Mediating effect of customer value
creation. International Journal of Information Management, 37(3), 229-240.