Value

Value

The marketing job is to create, deliver, and capture customer value. What is value? Value primarily is the putting together of the right combination of quality, service, and price (QSP) for the target market. Louis J. De Rose, head of De Rose and Associates, Inc., says: “Value is the satisfaction of customer requirements at the lowest possible cost of acquisition, ownership, and use.”

Michael Lanning holds that winning companies are those that develop a competitively superior value proposition and a superior value-delivery system. A value proposition goes beyond the company’s positioning on a single attribute. It is the sum total of the experience that the product promises to deliver backed up by the faithful delivery of this experience.

Jack Welch put this challenge to GE: “The value decade is upon us. If you can’t sell a top quality product at the world’s lowest price, you’re going to be out of the game.” McDonald’s used to say that it is in the fast food business. Later it said that it is in the quick service business. Today it says that it is in the value business.


A company’s ability to deliver value to its customers is closely tied with its ability to create satisfaction for its employees and other stakeholders.

Value ultimately depends on the perceiver. A child came upon three masons and asked, “What are you doing?” “I’m mixing mortar,” said the first. “I’m helping fix this wall,” said the second. The third one smiled: “We’re building a cathedral.”

Smart companies not only offer purchase value but also offer use value as well. You invest $30,000 in an automobile and you expect the dealer to help with respect to maintenance, repair, and answering a host of questions.

Ryder, the truck leasing company, not only rents a truck but provides a free book on how to pack and move. Nestlé not only sells baby food but has a 7 /24 service to answer parents’ questions about baby food.

Companies worry about spending more money to satisfy their customers. They need to distinguish between value-adding costs and non-value-adding costs. A hotel may consider adding afternoon bed-turning service that would raise the cost per room by $2.

Before doing this, it should survey whether its customers would be willing to pay $2 for this service. If the answer is no, then bed-turning service is a non-value-adding cost. But if the hotel puts an ironing board and iron in each room at a cost of $2 and guests think it is worth $3, then this would be a value-adding cost.