Creating Customer Value
1/29/2015
Creating Customer Value
http://eproduct.hbsp.harvard.edu/eproduct/product/cc_8176/content/OPS/html/print.html
1/22
1/29/2015
Creating Customer Value
This reading contains links to online interactive illustrations and video, denoted by the icons above.
In addition to using reader controls in the navigation bar, you can also use the arrow keys on your keyboard to navigate between pages. Sunil Gupta, Edward W. Carter Professor of Business Administration, Harvard Business School, developed this Core Reading with the assistance of writer Kamal Gupta.
Copyright © 2014 Harvard Business School Publishing Corporation. All rights reserved.
1 INTRODUCTION
O
ne of the fundamental tasks of a business is to understand the needs of its customers and create products
and
services
that
will
satisfy
those
customers
or
even
delight
them.
Sometimes this process is market-driven, whereby a firm uncovers the needs of its customers
through market research (e.g., Nabisco introduced the 100-calorie snack based on customer input).
a
Sometimes, however, this process is market-driving, whereby the company creates new products based on its own vision of the future (e.g., Apple’s founder Steve Jobs was famous for creating products without
conducting
any
formal
market
research).
In
both
cases,
managers
need
to
understand what customers value that will encourage them to pay for an organization’s products or services. Value is generally defined as the difference between what a customer pays for a product or service and the bundle of benefits she receives. Exhibit 1 depicts four ways in which customers derive value from a product or service: economic value, functional value, experiential value, and social value.
EXHIBIT 1 Four Types of Customer Value
Consumers get economic value when a product provides tangible monetary savings either at the time of purchase or over
Creating Customer Value
http://eproduct.hbsp.harvard.edu/eproduct/product/cc_8176/content/OPS/html/print.html
1/22
1/29/2015
Creating Customer Value
This reading contains links to online interactive illustrations and video, denoted by the icons above.
In addition to using reader controls in the navigation bar, you can also use the arrow keys on your keyboard to navigate between pages. Sunil Gupta, Edward W. Carter Professor of Business Administration, Harvard Business School, developed this Core Reading with the assistance of writer Kamal Gupta.
Copyright © 2014 Harvard Business School Publishing Corporation. All rights reserved.
1 INTRODUCTION
O
ne of the fundamental tasks of a business is to understand the needs of its customers and create products
and
services
that
will
satisfy
those
customers
or
even
delight
them.
Sometimes this process is market-driven, whereby a firm uncovers the needs of its customers
through market research (e.g., Nabisco introduced the 100-calorie snack based on customer input).
a
Sometimes, however, this process is market-driving, whereby the company creates new products based on its own vision of the future (e.g., Apple’s founder Steve Jobs was famous for creating products without
conducting
any
formal
market
research).
In
both
cases,
managers
need
to
understand what customers value that will encourage them to pay for an organization’s products or services. Value is generally defined as the difference between what a customer pays for a product or service and the bundle of benefits she receives. Exhibit 1 depicts four ways in which customers derive value from a product or service: economic value, functional value, experiential value, and social value.
EXHIBIT 1 Four Types of Customer Value
Consumers get economic value when a product provides tangible monetary savings either at the time of purchase or over