Defining customer value

The motivation to study the concept of customer value has been explicitly stated by many scholars. Holbrook (1994, p. 22) stated that customer value is the fundamental basis for all marketing activities. Furthermore, Keith (1960) said that the long-term success of the company depends on the providing customer the highest value for the price paid while Huber et al. (2001) and Kotler & Keller (2008) generalized that the creation of superior customer value has been claimed to be a key to business success. Kumar and Reinartz (2016) added that the aim of any enduring business is, first, to create value for custom-ers, and, second, draw some part of this customer value as the profit for the company.

Summarizing, customer value has become the indispensable concept in any area of business (Lindgreen et al., 2012) which has led many companies to become increasingly interested in value-based strategies, and thus focused on understanding how to create, communicate and deliver value to differentiate from competitors and gain competitive advantage (Woodruff, 1997).

There can be three subsequent stages of how the definitions of customer value have evolved (Eggert et al., 2018):

• Stage 1: early customer value definitions

• Stage 2: broadening the scope of customer value definitions

• Stage 3: increased depth of understanding customer value.

In the first stage, scholars tried to transposition existing consumer definitions of customer value into the business context (Eggert et al., 2018). These definitions built on the trade-offs between what consumers get in exchange for what they give. When translated into business context, the get and give elements are related to the value embedded in the goods. Hence, also reflecting the value in exchange perspective. Scholars used various terms while defining customer value such as utilities, perceived quality (Zeithaml, 1988), customer’s willingness to pay (Porter, 1985, p. 3), monetary units (Anderson et al., 1993), worth, benefits, and quality (Woodruff, 1997), economic and social gains (Gassenheimer et al., 1998) or benefits and costs (Ulaga and Chacour, 2001).

In the second stage, the customer value definition gains broader spectrum while the most goods-dominant view on customer value is complemented with the value potential stem-ming from business relationships (Eggert et al., 2018). In this view, the customer value is the trade-off between benefits and sacrifices gained over the provider-customer rela-tionship (Ravald and Grönroos, 1996; Ulaga and Eggert, 2006). The relarela-tionship be-tween the provider and the customer gained the facilitating role in the exchange of goods and services. Hence, it can be implied that the second stage is a transitional perspective between value in exchange and value in use paradigms.

Finally, in the third and most contemporary stage, value definitions reflect the most in-depth understanding of customer value. Unlike in the first two stages, reflecting the view on the value being created by the supplier, the last stage recognizes the role of custom-ers in the value creation process clearly showing the influence of SD-logic and moving from the value in exchange to value in use perspective (Grönroos, 2008). Definitions of customer value in this stage point at value co-creation within provider-customer spectrum as well as recognize wider network of actors co-creating value (Frow & Payne, 2011) Moreover, value is not seen any longer as embedded in goods but as the effect of col-laboration between and integration of resources of the parties involved (Eggert et al., 2018). Table 4 gathers several examples of customer value definitions grouped by the three stages as proposed by Eggert et al. (2018).

The definitions gathered in Table 4 well represent each of the stages, and while compar-ing between definitions from different stages, the difference in focus of the scholars is evident. The most significant differences between the early definitions and the more con-temporary definitions of customer value are the emphasis on value in use and the recog-nition of the customers’ and broader network’s roles in the value co-creation process.

Nevertheless, it does not mean that the tradeoff between the give and get elements does not have any more place in understanding the concept of value as value co-creation requires that knowledge, various skills, competencies, and resources are being ex-changed and integrated within the provider-customer network (Cambra-Fierro et al., 2017), and ex-change implies that something is given in order to receive something.

Hence, to encompass both the early and the contemporary views on the customer value, it can be said that:

Table 4. Customer value definitions.

Stage Definition of customer value Author

Stage 1 “… overall assessment of the utility of a product based on a perception of what is received and what is given.”

Zeithaml, 1988

“…the perceived worth in monetary units set of economic, technical, service and social benefits received by a customer firm in exchange for the price paid for a product offering, taking into consideration the available alternative suppliers’ offerings and process.”

Anderson et al., 1993

“A value judgement is the customer's assessment of the value that has been created for them by a supplier given the trade-offs between all relevant benefits and sacrifices in a specific-use situation.”

Ulaga and Chacour, 2001

“…the sum of tangible and intangible benefits and costs.” Kotler and Keller, 2016, p. 33

Stage 2 “… a business customer’s overall assessment of the utility of a relationship with a vendor based on perceptions of benefits received and sacrifices made.”

Menon et al., 2005

“Customer value in B2B contexts is defined as the customer’s perceived trade-off between benefits and sacrifices within relationships.”

Blocker, 2011

Stage 3 “The customer is always a co-creator of value. There is no value until an offering is used - experience and perception are essential to value determination.”

Lusch and Vargo, 2007

“…we define value-in-use in terms of the customer's goals, purposes or objectives, it arises from a variety of resources within the customer's network, or the system within which the customer resides, including not just those directly provided by the provider and the customer but also those provided by other actors in a configuration which the provider-customer relationship may influence.”

Macdonald et al., 2011

Customer value of an offering is a sum of tangible and intangible benefits and costs a customer perceives while creating and co-creating value within specific use situation.

The customer value definition, as presented above, points that there are various benefits and costs customers may perceive while integrating their resources to co-create value and that the value is created in use which is reflected by the specific use situation. Fur-thermore, value perception may depend on the specific use situation. Different custom-ers might decide for the same offering to achieve different goals (Woodruff and Gardial, 1996) or circumstances, i.e., environment and person/company variables, (Fennell, 1978; Grönroos and Voima, 2013) in which the offering is used alter the value perception.

Ulaga and Chacour (2001) linked specific use situation to different customer segments that show differences in type of offering’s criteria to be assessed, relative significance of each criterion and pool of competitors to be compared to. Furthermore, if the use situa-tion changes, the connecsitua-tions between specific offerings’ attributes, purpose, and con-sequences of its purchase, as well as goals to be achieved change too (Woodruff, 1997).

This also means that different use situations may require different sets of knowledge, skills or resources to be integrated within the value co-creation process which in turn may require the inclusion of different actors, hence influencing the net value the custom-ers perceive (Leroi-Werelds et al., 2017).