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Chapter
5
Customer Value Management
5.1 Introduction
In Chap. 3 we illustrated that customer value is the difference between
benefits and liabilities, that is,
Value = benefits – liabilities
where the benefits consist of
1. Functional benefits
2. Psychological benefits
3. Service and convenience benefits
and the liabilities consist of
1. Economical liabilities (customer costs)
2. Psychological liabilities
3. Service and convenience liabilities
For any product or service, the company that provides more value to its
customers than its competitors will eventually gain in sales and profitability.
However, for each particular product or service, the profile of benefits and
liabilities will be very different, and customers view each item’s benefits
and liabilities with different relative importance. When a product or service
has several competitors, it is necessary to do better in the areas that
customers view as very important.
B. Gale (1994) developed a systematic approach that tries to maximize
customer value in providing products and services. This approach consists
of the following steps:
1. Conduct customer surveys in order to get the information about relative
importance ratings of the aspects of a particular product or service that
matter to customers, and customers’ ratings of the company’s product
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