A customer Always BUYS when he see value for the product and this value is ALWAYS Given the ratio :Value = Benefits/ Prices Further a customer always compares the given product with that available from the competitor and buy only when he sees specific competitive advantages.
There special factors on which customer compares the product with those of the competitor. A customer could compare the features on the basis of the image of the product . thus a customer would prefer to buy a Cadbury’s FIVE STAR Chocolate rather then an unbranded product . Many a times, customer relationship is the key deciding factor. A customer may prefer to buy a life insurance policy from a known friend or his relative vis- a vis another agent it could also be because of the service quality. Maruti Automobiles scores high over its competitors mainly because of its high service quality image, etc.
Some of the factors that the customer consider and compares with his competitors are:
- Service quality ( Type of service provided by the company )
- Timing quality ( Time when the service is delivered . Typically does he keep up his promise)
- Delivery Quality (Does the company keep up its promise in so far as delivery ?)
- Relationship Quality (What type of relationship does the customer enjoy with respect to the company ? )( Is the customer satisfied or dissatisfied ?)
- Image ( What type of image does the company have ? Positive or Negative ?)
- Price , etc
The customer will always buy on the basis of the summation of there of these factors and he always compares the same with the competitors. He buys from company A Or company B only based on this UNIQUE Benefit that he drives.The Specific advantages that the customer perceives can be classified into Qualitative benefits.The Quantitative Benefit is mainly used in the case of purchasers of industrial products or high value consumer durable products and this comprises of :
- Acquisition Cost
- Possession Cost
- Usage Cost.
- Acquisition Cost – are those cost associated with acquiring a product . Thus for e.g., when one buys a house or a flat, the cost incurred in searching for a particular flat or cost incurred in visiting several property dealers, evaluating the property by visiting the Registrar’s office to check the title of the property , etc., are all part of acquisition cost. In case industrial product or high valued consumer durable products , this cost could include cost of testing the product or visiting other factories or it could also be the cost of wrong ordering .
- Possession Costs- are the cost associated with possessing the product . This includes the cost of internet , insurance and taxes payable , training cost Etc . thus the cost of interest payable on the purchase of a house or flat would be possession cost .
- Usage Cost – are the costs associated with using the product . the cost of electricity, property tax payable , maintenance cost, disposal costs, replacement cost are all part of usage costs, continuing the example of purchase of a house or a flat , then the monthly charges payable to the cooperative society for maintaining the society , the electricity cost or the cost of travelling from the place of residence to the bus stop or the railway station are a part of the usage cost.
It is the sum of these cost which when discounted over the life of the equipment , which determines whether the product is likely to be accepted or not