customers perceive value in the product The more the benefits exceed the costs the more value the product provides In other words.
When this ratio is I customers perceive value the greater the number the more value When this ratio is I customers feel they have overpaid for the product that they have been ripped off and are highly unlikely to buy that product again in the future Another way of looking at this is.
Perceived customer value =Total benefits – Total costs
When the difference between the benefits and costs is positive customers perceive value when it is negative they believe they have overpaid for the product One of the goals in the development of an operations strategy therefore should be to maximize the value added to the goods and services that are provided by the firm as suggested in Exhibit 2.2. Adding customer value during the transformation process can take many forms and translate into different things to different customers As seen in Equations 2.1 and 2.2 one way to add value is to reduce the cost of the product as when you buy books at Amazon com Added value to the customer also can mean that the product is more readily available such as when you order groceries online or buy a camera through the Internet Added value can be seen as receiving faster service as when you use the fast lane on the highway to pay a toll automatically or it may take the form of information as when amazon com tells you what other books have been purchased by buyers who have purchased the same book you bought or when Expedia com prov ides you with a list of different airlines going t a particular city and a comparison of their air fares Added value also can take the form of a more customized product be it personal computer from Dell or more personalized service. when out check into hotel and they know that you have stayed there before and have certain preferences
The key element in developing a successful operations strategy is for a firm to provide its customers with additional benefits at an increase in cost that is perceived to be Iess than those benefits.