As defined in Market Management by Kotler and Keller, customer-perceived value is the difference between the prospective customer evaluation of all the benefits and all the costs of an offering and the perceived alternatives. More than ever, customers have access to a plethora of information that can be used to see consumer reviews, look for competitors’ comparisons and to verify companies all through technology.
Now with that in mind there are two other terms that need to be understood the total customer benefit and the total customer cost. The total customer benefit examines the assumed monetary value of the different benefits customers expect from offering of the product, service, people and image. On the other hand, the total customer cost is the perceived amount of cost customers expect from the transaction like psychological, energy, time and monetary cost.
With all this knowledge, we can benefit and understand how to increase the customer benefit and reduce customer cost. If the marketer raises the value of the customer offering by increasing benefits and can reduce a cost or more. The customer will favor this choice versus the other ones. In reality, we are always measuring the customer perceived value by outweighing the benefit to the cost.
For example. I started going to Aldi Supermarket versus Publix because they have better quality meat and produce and the cost is significantly cheaper, and the location was close enough to make the change. While I know they might not be the elite choice, I can definitely argue they are the better one for those reasons. A downside to Aldi’s is that they are more limited in items versus a bigger chain like Publix, who has a lot more variety. I still like Publix and will go there but only when necessary.
In sum, the high benefits and the low costs are what created enough customer perceived value for me to switch from Publix to Aldi’s. The determinants of customer-perceived value are what influence and persuade customers to switch and prefer one company to another. These determinants can create long-term loyalty relationships between brands and consumers.