Consumer value

1. CSR 631 Research Stream Consumer value Jooyeon Ha

2. Contents • Foundation : Value theory • 1970s • 1980s • 1990s • 2000s

3. Value Theory • Value theory encompasses a range of approaches to understanding how, why, and to what degree humans should or do value things, whether the thing is a person, idea, object, or anything else. • This investigation began in ancient philosophy, where it is called axiology or ethics. Early philosophical investigations sought to understand the concept of "the good". Today much of value theory is scientifically empirical, recording what people do value and attempting to understand why they value it in the context of psychology, sociology, and economics.

4. 1970 • Hunt, S. D. (1976): Value in marketing The basic subject matter of marketing includes all transaction that involve any form of exchange of values between parties. • Monroe, K. B. (1979): Price as an index of Value Value: The number of units of quality per dollar expenditure Value = quality/price = perceived quality as a function of price/price

5. 1980s

6. Holbrook, M. B. (1984) Typology of consumer value

7. Thaler. R. (1985) : Development of a model of consumer choice blending economic reasoning with principles of cognitive psychology. 1. The value function is defined over perceived gains and losses relative to a reference point. 2. The value function is explained by gains and losses in consumer’s consumption situations. 3. The loss function is steeper than the gain function. People are more sensitive to the prospect of a loss than to the prospect of a gain. • Buyers evaluate a purchase opportunity by first judging the value of the offer and then deciding whether to make the purchase. • Price plays a role in the evaluation process.

8. Perceived Quality + + • Dodds, W. B., & Monroe, K. B (1985) + Price Perceived Value Willingness to Buy _ + Sacrifice • Buyers use price as an index of perceived product quality as well as an index of the perceived sacrifice that is made when purchasing a product. • Perceived value represents a trade-off between buyers’ perceptions of quality and sacrifice and is positive when perceptions of quality are greater than the perceptions of sacrifice.

9. Monore, K. B., & Champman, J. D. (1987) Acquisition Value vs. Transaction Value • Acquisition Value: The perceived benefits inherent in the product compared to the sacrifices and is defined as (maximum acceptable price – actual price). • Transaction Value: The perceived merits of the offer and is defined as (reference price – actual price). PV = acquisition value + transaction value

10. Zeithaml, V. A. (1988) • Four dimensions of value 1. Value is low price: Consumers equate value with low price, indicating that what they had to give up was most salient in their perceptions of value. 2. Value is whatever I want in a product: Consumers emphasize the benefits they receive from the product as the most important components of value. 3. Value is the quality I get for the price I pay: Consumers conceptualize value as a tradeoff between one “give”, price, and one “get” component, quality. 4. Value is what I get for what I give: Consumers consider all relevant “get” components as well as all relevant “give” components.

11. 1990s

12. Sheth, J. N., Newman, B. I., & Gross, B. L. (1991) Five dimensions of consumer value influencing consumer choice Functional Value Conditional Value Social Value Consumer Choice Behavior Emotional Value Epistemic Value

13. Five dimensions of value 1. Functional Value: The perceive utility acquired from an alternative’s capacity for functional, utilitarian, or physical performance. 2. Social Value: The perceived utility acquired from an alternative’s association with one or more specific social groups. 3. Emotional Value: The perceive utility acquired from an alternative’s capacity to arouse feelings or affective states. 4. Epistemic Value: The perceive utility acquired from an alternative’s capacity to arouse curiosity, provide novelty, or satisfy a desire for knowledge. 5. Conditional Value: The perceived utility acquired by an alternative as the result of the specific situation or set of circumstances facing the choice maker.

14. Babin, B. J., Darden, W. R., & Griffin, M. (1994) Two dimensions of value: Utilitarian & Hedonic value 1. Utilitarian value: Utilitarian value incorporates cognitive aspects of attitude, such as economic value for the money and judgments of convenience and time savings (Zeithaml, 1988) 2. Hedonic value: The hedonic dimension is derived from a product’s (or service’s) uniqueness, symbolic meaning, or the emotional arousal it evokes (Holbrook, & Hirchman, 1982).

15. Utilitarian & Hedonic Shopping Value (examples)

16. Butz, H. E., & Goodstein, L. D. (1996) • Customer Value: The emotional bond established between a customer and a producer after the customer has used a product or service. • Three levels of Customer Value 1. Expected Value: The expected or basic level is the level that is normal to that business or industry. The company provides those goods and services that customers have come to expect. 2. Desired Value: These are features that add value for the customer but simply are not expected because of company or industry standards. 3. Unanticipated Value: The organization finds ways to add value that is beyond the customer’s expectations or even desires, at least on a conscious level.

17. Oliver, R. L. (1996) • Perceived quality- Consumer value – Satisfaction Quality is precursor to both value and satisfaction. Value provides additional satisfaction; Satisfaction is derived from both quality and value. Consumer Value Satisfaction Quality

18. Woodruff, R. B. (1996, 1997) • The customer value hierarchy “Customer value is a customer’s perceived preference for and evaluation of those product attributes, attribute performances, and consequences arising from use that facilitate achieving the customer’s goals and purpose in use situations.”

19. Customer satisfaction with Received Value Desired Customer Value • Customer Value Hierarchy Model Customers’ goals and purposes Goal-based satisfaction Consequence-based satisfaction Desired consequences in use situations Attribute-based satisfaction Desired product attributes and attribute performances

20. 2000s

21. Sweeney, J. C., & Soutar, G. N. (2001) The development of multiple item scale to measure perceived value • Four dimensions of value

22. Multiple item scale of consumer value: PERVAL

23. Woodall, T. (2003): Value for the Customer (VC) • Five primary VC forms Balance of benefits and sacrifices Net VC Perceived product attributes Use/experience outcomes Marketing VC Derived VC Value for the Customer (VC) Option determined primarily on price Monetary difference from objective reference point Sale VC Rational VC

24. Relational interpretation of VC Best Profit Worst Net VC Marketing VC Rational VC Derived VC Aggregated VC Value for the Customer Satisfaction Loyalty Profit

25. Thank you!!