Value and cost to the customer: McKinsey Article

VALUE AND COST TO THE CUSTOMER
Name Course Instructor Date
McKinsey Article
In the article “Market Strategy and the Price Value Model”, pricing and a product's value to the customers can provide a competitive edge, and this can be visualized using the price-value model. However, value is subjective and much more challenging to determine when compared to pricing. This is further complicated when determining a product’s value to the average customer, and especially when there is inadequate information. There are also few cases of perfectly competitive markets and informed guesses are used to determine the value compared to the price identifying various products, services and customer behavior in certain industries helps (Golub, Henry & McKinsey, 2000). Even as value represents the maximum amount that customer is willing to pay for a product, the perceived benefit of a product depends on different factors that cannot be quantified. Price does not always depend on the value of a product or service, but customer surveys and market research can provide clues on customer value. There are also different approaches to the pricing strategy, which results in different values, and an organization can change the price, value, or both of them.
HBS article
In the HBS article, “Customer Intimacy and other Value Disciplines”, the authors highlight that delivering customer value depends on “operational excellence”, “customer intimacy” and “product leadership”
* Operational excellence- This empathizes a strategic approach applicable to the production and delivery of products and services. It also requires using pricing and convenience leadership where there is focus on minimizing costs and managing the links to customers and important channel partners.
* Customer intimacy – This strategy reflects segmenting and targeting markets based on an understanding of the customer needs, values, and problems where there are tailored offerings that fit and match f...