RESULT OBTAINED
Canonical method
Customer value map: placing the offer between perceived quality and price
What must be established
A useful analysis keeps its controls visible.
- 01
Fix a segment, a buying situation and the alternatives actually considered, the status quo included.
- 02
Obtain from the customers themselves the attributes, their weights and the rating of each offer, with the size and date of the sample.
- 03
Compute the ratios to the competitor average, then check that the position holds when an attribute or a group of respondents is removed.
Decision reference
Make the next choice more explicit.
DECISION SUPPORTED
In the eyes of a segment’s customers, is the offer worth its price against the alternatives, and in which direction should it move?
DELIVERABLE TO KEEP
A dated map per segment, with the calculation behind each position, the gap to the fair-value line and the move retained: hold, raise perceived quality or rework the relationship to price.
NEXT ELEMENT TO EXAMINE
Value propositionExplore →Have quality rated by those who buy
The map is worth something only if quality is judged by customers rather than by the company. Buyers from a single segment are surveyed, including those of competitors, because the customers of an offer readily overrate it. They first name the attributes that weigh in their choice, without stopping at the product: reliability, lead time, service, ease of use, relationship, perceived risk. They then share a hundred points among these attributes and rate each offer from 1 to 10 on each of them. The weights change from one segment to another: a hurried buyer and a cautious buyer do not pay for the same things, and a map that mixes them describes a customer who does not exist. Price follows the same rule: the comparison uses what the customer bears for the use considered, discounts, access fees and switching costs included, rather than the list price. The sample, its size, its date and the question asked stay attached to the map, because a position without provenance cannot be reviewed.
- Segment and buying situation
- Attributes named by customers
- Weights over a hundred points
- Price borne for the use
Compute two ratios and read the gap to the line
The weighted score of an offer is the sum, attribute by attribute, of the weight multiplied by the rating. Relative perceived quality divides this score by the average score of the competing offers; relative price divides the price borne by the average competitor price. An offer at 1.00 on both axes sits at the market average. Simulated example, with four attributes weighing 40, 25, 20 and 15 points: offer A scores 7.60, its fictitious competitors B and C 6.80 and 7.25. Its relative perceived quality is 7.60 divided by 7.025, or 1.08. Its price of 110 against a competitor average of 100 gives a relative price of 1.10. By convention, the fair-value line passes through the point (1; 1) with a slope of 1: the value gap is relative perceived quality minus relative price, here minus 0.02. Offer A therefore sits on the line: its quality lead is entirely paid for by its price. The slope remains a convention, replaced by the trade-off observed among customers when it is known.
- Weighted score
- Relative perceived quality
- Relative price
- Gap to the line
Choose the move, not the price
The map is used to decide on a direction. An offer below the line costs more than it delivers: perceived quality must be raised on the attributes that weigh most, or the relationship between what it delivers and what it costs must be reworked. An offer on the line can hold its position or seek an edge on an attribute that competitors would take a long time to match. An offer above the line holds a value advantage, which it can convert into market share or into margin, but not fully into both at once. Before any move, two tests: does the gap exceed the measurement uncertainty, and does the position hold when the heaviest attribute or the most influential group of respondents is removed? A gap that vanishes under this test justifies no move. The price level is then set within the marketing mix. The map is reviewed when a competitor moves, when the attribute weights shift or when a new alternative enters the choice.
- Below the line
- On the line
- Above the line
- Gap beyond the noise
DECISION ASSET
Value map by segment
Each offer is placed by its relative perceived quality, weighted by the customers of the segment, and by its relative price, then read against the fair-value line.
Attributes
- Input
- Criteria named by customers
- Control
- Who judges quality?
- Output
- Segment list
Weights and ratings
- Input
- A hundred points, ratings 1 to 10
- Control
- Dated, sufficient sample?
- Output
- Weighted score
Ratios
- Input
- Competitor averages
- Control
- Above or below the line?
- Output
- Value gap
Move
- Input
- Gap and stability test
- Control
- Hold, raise, rework?
- Output
- Dated decision
- Customer Value, Inc., Bradley T. Gale’s firm, The Value Map (opens in a new tab)Presentation of the value map and the fair-value line by the firm of the author of Managing Customer Value.
- Anderson and Narus, Business Marketing: Understand What Customers Value, Harvard Business Review, 1998 (opens in a new tab)Reference on measuring value as the customer perceives it, compared with the alternative the customer would retain.
MOVE FROM ANALYSIS TO YOUR DECISION
Test the preference, credibility and defence of the positioning
MOVE FROM ANALYSIS TO YOUR DECISION
Test the preference, credibility and defence of the positioning
RETURN TO THE DECISION SYSTEM
See the canonical definition of marketing strategy→