Page 44 - DMGT308_CUSTOMER_RELATIONSHIP_MANAGEMENT

Unit 2: Customer Value

value represents the perceived utility of an alternative resulting from its inherent and attribute- Notes
or characteristic-based ability to perform its functional, utilitarian, or physical purposes. Social
value represents the perceived utility of an alternative resulting from its image and symbolism
in association or disassociation with demographic, socioeconomic, and cultural-ethnic referent
groups. Emotional value represents the perceived utility acquired by an alternative as a result of
its ability to arouse or perpetuate feelings or affective states, such as comfort, security, excitement,
romance, passion, fear, or guilt. Epistemic value is the perceived utility resulting from an
alternative’s ability to arouse curiosity, provide novelty, or satisfy desire for knowledge. Finally,
conditional value is the perceived utility acquired by an alternative as a result of the specificfi
situation or the physical or social context faced by the decision maker. This typology identifies
dimensions of customer value that related to the higher-order constructs suggested by Park,
Jawarski, and MacInnis (1986), but it does not specifically capture the cost/sacrifice aspect of
customer value. In addition, there are other functional, experiential, and symbolic dimensions
of customer value that are not captured in this framework.
More recent frameworks have focused on customer value in specific contexts. Ulaga (2003), for
example, identifies eight categories of value in business relationships—product quality, delivery,
time to market, direct product costs (price), process costs, personal interaction, supplier
know-how, and service support. For each category Ulaga identifies three or four specific benefits
that are reective of this category. This framework is quite comprehensive in delineating
relationship value, but there are other types of customer perceived or received value in a
business-to-business context.

Woodall (2003) identifies five primary forms of value for the customer (VC)—net VC (balance
of benefits and sacrifices), derived VC (use/experience outcomes), marketing VC (perceived
product attributes), sale VC (value as a reduction in sacrifice or cost), and rational VC (assessment
of fairness in the benefit–sacrifice relative comparison).
This framework is the most comprehensive of previous works, and Woodall identifies many
specific types of value associated with his higher order: derived VC, marketing VC and sale VC
constructs. There is, however, considerable overlap in the categories in the sense that the same
benefits appear under multiple headings. In addition, the benefits and sacrifices identified do
not fully capture the domain of the higher-order value dimension and Woodall does not identify
the sub dimensions of customer value of which the specific benefits and sacrifices might be
illustrative examples. These limitations make the framework difficult to use either for developing
marketing strategy recommendations, or as a basis for developing measures of key dimensions
of customer value.

Similar limitations apply to Holbrook’s (1999; 2005) customer value typology (axiology) that
considers the source of motivation behind a value assessment (intrinsic or extrinsic), the
orientation of the value assessment (self or other oriented), and the nature of the value assessment
(active or reactive). Holbrook identifies eight types of value: efficiency, excellence, status, esteem,
play, aesthetics, ethics and spirituality. Although this typology has a clear conceptual basis, it is
consumer outcome and meaning focused, does not fully capture the domain of the customer
value construct, and may not apply as well to business-to-business contexts.
Finally, Heard (1993–94) takes a different perspective. He conceptualizes customer value in
terms of three factors— product characteristics, delivered orders, and transaction experiences—
that are linked to basic value-chain activities or processes (design, production, marketing) that
reflect where value is created within organizations. These factors, or sources of value, are evaluated
by customers along four value dimensions—being correct, timely, appropriate, and economical.
The specification of three value sources (product characteristics, delivered orders, and transaction
experiences) is parsimonious, but other sources of value are created by other processes within
organizations.

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