Modern view of customer value: focus on value-in-use

The academic conceptualizations of customer value have gradually moved from focusing on objective benefits and sacrifices to focusing on relationship value and most recently on the co-creation of value (Eggert et al. 2018). An early, popular consolidating definition of customer value by Woodruff (1997) already hints at the changes in the research field:

“Customer value is a customer's perceived preference for and evaluation of those product attributes, attribute performances, and consequences arising from use that facilitate (or block) achieving the customer's goals and purposes in use situ-ations.” (Woodruff 1997)

Woodruff’s definition was indicative of contemporary research because it emphasized that value is not created for the customer before the offering is being used. This is central to the service-dominant logic (S-D logic) (Vargo & Lusch 2004, 2008). The S-D logic argues that the fundamental unit of exchange where value is bound is the application of skills and knowledge, defined as ‘service’, rather than a good. Service thus means that the exchange of specialized skills or knowledge and physical goods act as distribution

mechanisms of service to their users (Vargo & Lusch 2004). For example, a service provided by a toolkit is to make construction work faster and that of an invoicing software is to replace manual work and free up working time. Additionally, products can provide satisfaction for individuals’ higher-order needs such as feelings of happiness, security, or accomplishment, as found by Gutman (1982) and recognized by Vargo & Lusch (2004).

The service-based nature of products has been recognized by academics for a longer time (e.g. Kotler 1977, p. 8), but made widely recognized by the S-D logic conceptual-ization (Vargo & Lusch 2004, 2008), perhaps boosted by the growing environmental pressures to redesign the manufacturing-based economy, among other factors. When this perspective is applied to understanding customer value, the focus clearly shifts from the pre-determined product attributes to the use and delivery of the offering. The inter-action between the customer and service provider becomes critical, as it defines how well the original service need of the customer is fulfilled.

Therefore, the introduction of S-D logic has again emphasized the difference between previously discussed value-in-exchange and value-in-use. The main attention of modern research when analyzing customer value has been in value-in-use (Eggert et al. 2018).

That is because the production process of a product or a service can only create potential value (value proposition), and it is only through customer action in the usage phase of the offering that value can be actualized and created (Vargo & Lusch 2004, 2008; Grön-roos & Voima 2013). The earlier discussed value-in-exchange is directly related to the pricing of the offering and is in fact compared against the experienced value-in-use by the customer in the purchasing situation. Value-in-exchange can thus also be considered a derivative of value-in use. This approach was in fact already employed in Aristotle’s Value theory (Gordon 1964).

Directly from these considerations stems the concept of value co-creation. Basing on S-D logic, tangible goods too are mediators for services, but for these services to be deliv-ered the customer always needs to learn to use, maintain, repair, and adapt the product according to their unique needs and situation (Vargo & Lusch 2004). Therefore, the co-creation perspective further emphasizes that customer value can only be created with the customer involved in the process, and that value is always uniquely determined by the customer (Vargo & Lusch 2008). This is also affected by the fact that such value-in-use is dependent not only on capabilities of the supplier but also on those of the customer themselves (Macdonald et al. 2016).

While Vargo & Lusch (2004, 2008) argued that the customer is always a co-creator of value, Grönroos & Voima (2013) take it a step further by stating that customer is the value creator and not always is the firm even involved, basing their view on the strict definition of customer value as value-in-use. Figure 2 illustrates the different spheres of value creation according to Grönroos & Voima (2013). Value is facilitated in the provider sphere but realized either in the joint sphere or independently by the customer.

Figure 2 Spheres of value creation (adapted from Grönroos & Voima 2013).

Aarikka-Stenroos & Jaakkola’s (2012) study on supplier and customer roles and activi-ties in value co-creation processes addresses the joint process to even more detail and acknowledges that the supplier and customer may have different views on the value creation and mutual diagnosis is needed to align perceptions. According to them, the supplier’s role which Grönroos & Voima call facilitation may be value option advisor, value process organizer, value amplifier, and/or value experience supporter. The cus-tomer, on the other hand, may assume the roles of co-diagnoser, co-designer, co-pro-ducer, and/or co-implementor. Aarikka-Stenroos & Jaakkola (2012) define the activities that take place in the joint co-creation space of value-in-use as:

1. Diagnosing needs

2. Designing and producing the solution 3. Organizing process and resources 4. Managing value conflicts

5. Implementing the solution

In this co-creation setting, the customer experiences the relationship with the provider on three different levels: cognitional, emotional, and behavioral (Payne et al. 2008).

Value co-creation processes and activities are temporally dynamic and affected by cus-tomer learning as well as provider organization’s learning (Payne et al. 2008). The critical role of collaboration and interaction in the co-creation of value has also led scholars to

emphasize the importance of providers’ good B2B communication skills in the recent decades (e.g., Ballantyne and Varey 2006; Haumann et al. 2015; Heinonen & Strandvik 2015). Systematic planning and mapping of the interactions with customers in the joint sphere is likely to foster value co-creation (Payne et al. 2008), although the provider has to be careful not to destroy value by conducting customer interactions carelessly (Grön-roos & Voima 2013). The co-creation viewpoint of value also implies a heightened em-phasis on long-term communications strategy and introduction or teaching of new value co-creation opportunities for the customer (Payne et al. 2008).

This study defines customer value following the definition of Grönroos & Voima (2013) to facilitate a systematic analysis:

“…we define value as value-in-use, created by the user (individually and socially), during usage of resources and processes (and their outcomes). Usage can be a physical, vir-tual, or mental process, or it can be mere possession.” (Grönroos & Voima 2013)

In the empirical part of this study the terms ‘customer value’ and ‘customer-perceived value’ are used as synonyms, to be able to highlight the strong customer perspective of this definition. On the contrary, value that a provider aims to deliver but that fails to be perceived or created by the customer is referred to as ‘potential value’.

Employing the value-in-use concept provides a clear definition that is strongly aligned with the latest research. This allows for explicit analysis to be carried out without entan-gling oneself in contradictory views of value in the process.