What is Customer Value and Customer Satisfaction in Marketing?

What is Customer Value and Customer Satisfaction in Marketing Management? It's Meaning & Differences.

This article will discuss about following points:

1. What is Customer value and Customer satisfaction?

2. Difference between Customer value and Customer satisfaction. Customer value VS Customer satisfaction.

3. Customer value & Customer satisfaction examples.

Let's talk,

we will discuss and understand the concept of Customer value and Customer satisfaction. These two are among the most vital concepts in Marketing field. Guess why?

Because of "Customer". Because he is the focus point. Because Modern marketing is based on the Needs of Consumers. Someone may think Customer value and Customer satisfaction are one and the same. But the answer is "No". So, the question arises that "Are Customer value and Customer satisfaction interdependent or mutually exclusive?" and "What is the relationship between Customer value and Customer satisfaction?". 

we will discuss those points in this article. Now let's understand them individually.

Customer Value

Customer value is all about the correlation between the perceived value you offer to your target market and the Exchange price (cost) of that offering. Now understand these two important factors:

Perceived value  is the perception about products or services before the act of purchasing. And exchange price is the cost which consumer pays. Example is the best way to learn, so let's take an example:

Suppose a child has 1 unit of money, and she wants a chocolate. So, she thinks about the options available in the market. However every human has a personal preference about the brands that he uses which keeps change from time to time but choosing from options is also a part of the buying process. So, the child also has a perception (Perceived value) about those chocolates of different brands in 1 unit of money which she used in past. And she really likes the Chocolate A more than any B. So, she tells her mom, " Mumma mumma i want Chocolate A."

Woah, did you see that? Oo oo i mean did you read that? She selects chocolate A based on perceived value. So, the kid explains us that as a consumer, we always predict about the benefits and value that products will give us against a price. The benefits can be Product quality, taste, Packaging, Design, After sales services, Staff behavior, etc. 

Whenever you purchase any product you assess its perceived value and Pre-purchase concept. It starts with the assessment of value perceived and it ends on finally purchasing a product.

Now, if you have a company, Customer value is a vital concept for you. A company must perform well and better than competitors in all aspects so that your product or service can make leave a mark in the minds of Customers. High customer value is vital for customer retention and performing well in this ever changing market. 

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High customer value is a Competitive advantage for a company which differentiate your brand from competitors. It helps in Customer retention.

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Now let's see what is Customer Satisfaction and their

Customer satisfaction.

Customer satisfaction is the assessment by the customer about the Actual performance of product or service after using it against Expected performance. Here, customer evaluates the value delivered by the product on the basis of his expectations. 

Customer expects a level of satisfaction value from the product or service. If the product performs above the expected value then the customer will be satisfied and vice versa. After creating expectations from High customer value in the mind of customer, the product should perform above expected level or atleast equal to expectations. Otherwise from that time customer value will reduce and customer will go for competitors product. Customers have expectations because of previous experience, suggestions from friends, promise of sellers, etc.

Now, a customer can only evaluate the performance of product after using the item (come on, we know that). So, it proves that Customer satisfaction is Post-purchase concept and this feature of customer satisfaction differentiates it from the concept of customer value.

Satisfaction depends on subjective in nature. It is very difficult to measure the level of satisfaction. 

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Because a product cannot give the same level of satisfaction to all of it's customers.

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Ok, from above analysis of both, we learned that Customer value and Customer satisfaction are interdependent. For good customer value, the customer should be satisfied and for customer satisfaction, their should be some perceived value in the mind of customers. So, understanding of interrelationships among Customer value and Customer satisfaction is vital for the businesses for success. 

Woofff, we did it. Now we understand both concepts. But wait;

Come on, let's differentiate Customer value and Customer satisfaction.

Customer value VS Customer satisfaction

(1) Meaning

Customer value is the perception of the customer about what value he will (prediction) get by using the product against its cost.

On the other hand Customer satisfaction is the evaluation by customer about comparing Expectations and Actual performance of the product. 

(2) Computation

Customer value is computed by substracting the cost from the value & benefits customer gets.

Customer satisfaction is computed by comparing Expectations and actual performance which depends on the feelings of customer.

(3) Process

Customer value is a proactive process because it is perception about products before purchasing them.

Customer satisfaction is a reactive process as customer evaluates after using the product.

(4) Concept

Customer value is a pre purchase and it is relative concept. Here, customer compares product with it's competitors to determine which one gives highest value in a level of cost.

Customer satisfaction is a post purchase and emotional concept. Here, customer feels the value given by the product, and reacts as satisfied, neutral or unsatisfied.

(5) How they help companies

Studying customer value help companies in developing strategies about product's design, packaging, quality, promotion etc.

Customer satisfaction help companies to evaluate the performance of the product and strategies.

Related Articles:

What is Marketing? Nature, Scope/Functions, Importance, Concepts.

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