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Measuring Variability Factors in Consumer Value for Profit Optimization in a Firm - A Framework for Analysis

Listed author(s):
  • Rajagopal

    (Business Division, Institute of Technology and Higher Education, ITESM, Mexico.)

Consumer value may be defined as a tool to measure the prolonged satisfaction and the on-going propensity to buy products and services. Though there are many issues floating in current debates about consumer value, it may be argued that the importance of consumer value in terms of the level of satisfaction is evident in providing a revenue stream to companies, and thereby repeat purchase behavior is of strategic importance to management. The consumer value concept is used to assess product performance and eventually to determine the competitive market structure and the product-market boundaries. Consumer value may be measured as product efficiency viewed from the consumer¡¦s perspective, i.e., as a ratio of outputs (e.g., resale value, reliability, safety, or comfort) that consumers obtain from a product relative to inputs (price, running costs, and so on) that consumers have to deliver in exchange. The efficiency value derived can be understood as the return on the consumer¡¦s investment. Products offering a maximum consumer value relative to all other alternatives in the market are characterized as efficient. This paper develops the framework for measuring consumer value with reference to establishing the long-run relationship with the firm and optimizing its profit levels. The discussions in this paper address the core issues of consumer value in retailing products and services: how to conceptualize it, how to measure it, and how to manage it.

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Article provided by College of Business, Feng Chia University, Taiwan in its journal Journal of Economics and Management.

Volume (Year): 1 (2005)
Issue (Month): 1 (January)
Pages: 85-103

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Handle: RePEc:jec:journl:v:1:y:2005:i:1:p:85-103
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  1. Carroll, Christopher D & Kimball, Miles S, 1996. "On the Concavity of the Consumption Function," Econometrica, Econometric Society, vol. 64(4), pages 981-992, July.
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