Question

Recall the steps required in calculating the total economic value of a product. Choose a product and brand that you typically purchase. Provide a list of drivers for that product that matter for you. Include both monetary and psychological drivers in that list. Next, identify a reference brand and describe your points of differentiation for your chosen brand for each of the drivers you have mentioned before. Describe one reason why a consumer’s perceived value of the same brand/product may be different from the actual value. What advice would you provide the marketer of this brand to bring the perceived value closer to the actual value?

Answer 1

Steps in calculating Total Economic Value (TEV) of a product

Economic Value comprises of Reference Value and Differentiation Value. Reference Value refers to a value which customer attach to different kind of alternatives available and their respective values while Differentiation Value means the product which we choose and the quality by which it is being differentiated from the alternatives. Now this differentiation value comes in two form viz. Monetary Value and Psychological Value. Monetary Value means the total income or savings we accrue when we purchase the product whereas Psychological Value refers to the extent the product creates a satisfaction in the mind of the customer.

I typically prefer to purchase AMUL's Milk product specially its Butter and Milk.

Driver's of the product:

1) Trust in company as it is run by co-operative and their first motive is not profit making

2) Quality- unmatchable

3) Pricing- Affordable

4) Satisfaction: Satisfaction at Fullest

Reference Brand : Britannia

Difficult to derive same level of taste and satisfaction from Brand Britannia in Butter and Milk segment while price differentiation is very thin.

Perceived Value and Actual value can only be matched if corporations work on products and enhance its value in order to meet the satisfaction levels of customer.