Page 110 - Design for Six Sigma for Service (Six SIGMA Operational Methods)

Customer Value Management 89

simply one dollar amount versus another dollar amount. For many other
businesses, the overall customer cost structure is rather complicated. For
example, the cost-related factors in purchasing a car might involve trade-in
allowance, rebate, and finance rate, besides the purchase price of the car. In
such a case, the construction of the market-perceived price profile is
necessary, because it will integrate all the cost factors and compile a
combined price score.

The construction of the market-perceived price profile is very similar to that
of the market-perceived quality profile. Customers are asked to list the
factors that affect their perception of a product’s cost. Table 5.4 is an
example of a market-perceived price profile in the luxury car market.

However, it is people’s convention that the lower the price, the better.
Having a higher customer satisfaction score value in price level is counter-
intuitive. In the example of Table 5.4, Acura’s market-perceived price score
is 118.7. Since it is more than 100, this means that the Acura’s overall price
level is more attractive (lower) than other competitors. However, using the
inverse score 84.2 is more intuitively appealing.

If we just compare a one-shot purchasing price, a simple price ratio can be
used. For example, if Acura’s price is $35,200, and the average competitor’s
price is $40,000, then the price ratio is $35,200 $40,000 = 0.88. If a per-
centage score is used, then the relative price ratio is 0.88 × 100 = 88. If a
relative price ratio of a product is less than 100, then its price level is lower
than that of its competitors’ products.

5.4 Customer Value Map

The customer value map is a very useful tool to identify the competitive
position of a particular product in comparison with other competitors’
products. A product is competitive if it has high customer benefit and low
customer cost. The customer benefit can be well represented by the market-
perceived quality score that we discussed in Sec. 5.2, and the customer cost
position can be well represented by the relative price ratio that we discussed
in Sec. 5.3.

The customer value map is a two-dimensional plot of the market-perceived
quality score on the horizontal axis versus the relative price ratio on the
vertical axis. Figure 5.1 illustrates what a customer value map looks like. In
this customer value map, each dot represents a particular product. The
position of the dot depends on the values of its market-perceived quality