Defining Perceived Value: The Relationship Between Benefits and Price
Perceived value represents the degree to which consumers believe that a product or service reflects a balance between its perceived benefits and its cost. In other words, perceived value is the perception of the worth of a particular product/service that a consumer holds in mind while considering its price. It is defined as the ratio between perceived benefits and perceived price.
The concept of perceived value is important in marketing as it determines a customer’s willingness to pay for a product or service. A higher perceived value means that the customer perceives the benefits of the offering to outweigh its cost, leading to increased customer satisfaction and loyalty. Conversely, if the perceived value falls below a certain threshold, customers are likely to look elsewhere for alternatives that are priced in line with their perceived value.
To create value perception for their products/services, businesses use various marketing techniques such as altering the product’s features, improving design/quality, offering customer support, and lowering prices. These efforts can lead to a higher perceived value of the product and, in turn, drive sales growth.
Understanding the relationship between perceived benefits and perceived price is crucial in determining the success of a product or service in the market. Businesses that can create a higher perceived value for their offerings can gain a competitive advantage and drive long-term profitability.
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