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Measuring Variability Factors in Consumer Values for Profit Optimization in a Firm – A Framework for Analysis

Listed author(s):
  • Rajagopal

    (Institute of Technology & Higher Education, ITESM, Mexico City)

Consumer value may be defined as a tool to measure the prolonged satisfaction and an on-going propensity to buy the product and services. Though there are many issues floating in an on-going debate about the consumer value, it may be argued that the consumer value in terms of the level of satisfaction is evident in providing a revenue stream to the company with high involvement and thereby the repeat purchase behavior is of strategic importance to management. The consumer value concept is utilized to assess product performance and eventually to determine the competitive market structure and the product-market boundaries. The consumer value may be measured as the product efficiency viewed from the consumer’s perspective, i.e., as a ratio of outputs (e.g., resale value, reliability, safety, comfort) that consumers obtain from a product relative to inputs (price, running costs) 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 the consumer values in reference to establish the long run relationship by the firm and optimize its profit levels. The discussions in the paper attempts to endure the core issues of consumer values in retailing the products and services as how to conceptualize consumer values, how to measure it, and how to manage it.

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Paper provided by EconWPA in its series Microeconomics with number 0407011.

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Length: 23 pages
Date of creation: 29 Jul 2004
Handle: RePEc:wpa:wuwpmi:0407011
Note: Type of Document - pdf; pages: 23
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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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