5.1 Introduction

In Chap. 3 we illustrated that customer value is the difference between benefits and liabilities, that is,

where the benefits consist of

1. Functional benefits

2. Psychological benefits

3. Service and convenience benefits

and the liabilities consist of

1. Economical liabilities (customer costs)

2. Psychological liabilities

3. Service and convenience liabilities

For any product or service, the company that provides more value to its customers than its competitors will eventually gain in sales and profitability. However, for each particular product or service, the profile of benefits and liabilities will be very different, and customers view each item's benefits and liabilities with different relative importance. When a product or service has several competitors, it is necessary to do better in the areas that customers view as very important.

B. Gale (1994) developed a systematic approach that tries to maximize customer value in providing products and services. This approach consists of the following steps:

1. Conduct customer surveys in order to get the information about relative importance ratings of the aspects of a particular product or service that matter to customers, and customers' ratings of the company's product or service together with those of competitors; Gale called this step of compiling the market-perceived quality profile.

2. Collect information about the price of the company's product or service or combined customer costs, together with competitors' prices or combined customer costs. Gale calls this step of compiling the market-perceived price profile.

3. Complete a comprehensive customer value evaluation of...