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What is Customer value creation?

‘Value’ in terms of business can be explained as what customer gets for what the customer pays (Soman D and Marandi N S, 2009). A consumer is someone who purchases a service or a product sold by an organization. Value from the customers’ point of view, as shown in figure 1, is determined by four attributes by name access, product, cost and experience. Each of these attributes is measured by several factors such as availability, channel of distribution, reliability, brand, service, functions, and cost of ownership, features and payment terms.

An organization in order to create customer value has to be efficient enough to earn profits even after offering all these things to its end customers.

Figure 1: Customer value (Source: Plaster G and Alderman J D, 2006, pp 100)

Figure 1: Customer value (Source: Plaster G and Alderman J D, 2006, pp 100)

Customer value creation which has emerged in the recent times has been accepted to be closely related with the quality revolution of any organization. Customer value creation is based on the fulfillment of customer’s expectations by identifying in detail how a service or a total product offered by an organization satisfies them. Customers’ expectations vary depending upon numerous variables such as price, conformance, reliability, responsiveness and professionalism (Ivarsson L, Nilson A and Rimfalt T, 2010).

Customer expectation is a combination of all such parameters. In order to deliver products and services those are of great value to customers’, it is mandatory for all organizations to know in detail the expectation of customers and provide them unique products and services. For example, Mc Donald challenges to deliver all its orders within one minute from which the order has been placed by the customer, irrespective of the number of items ordered by the customer. On failing, it promises to offer the item for free. However, it has managed to deliver food stuff to all its customers within one minute till date by proving itself as the fastest service providing restaurant.

Consumer behavior can be understood well by collecting inputs from customers through various sources, integrating them and verifying the integrated and accuracy of collected data. Hence all organizations must engage themselves in studying customers through an exclusive department with dedicated team of marketing professionals.


  • Ivarsson L, Nilson A and Rimfalt T (2010), Customer Satisfaction, Lambert Academic Publishing, USA
  • Plaster G and Alderman J D (2006), Beyond six sigma: profitable growth through customer value creation, John Wiley and Sons, USA, pp 100
  • Soman D and Marandi N S (2009), Managing Customer Value: One Stage at a Time, World Scientific, Singapore

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