Glossary
Business case value analysis
- A financially-focused approach to value analysis that involves constructing a spreadsheet that compares the differences in cost savings and revenue enhancements delivered by competing product alternatives.
Business value
- Contribution to a business customer's bottom line.
Consumer value
- The satisfaction of a consumer's personal consumption needs, wants, and desires.
Differential value-in-use
- The difference between a product's total value-in-use to a customer and the total valuein-use of the customer's next best alternative.
- The sum of all the values-in-use of all the specific differences between a product and the customer's best other alternative.
Inducement to purchase
- The difference between the benefit a customer receives from a product and the costs the customer must incur in obtaining it.
- The difference between the total value-in-use a product offers and its price.
- The financial payoff to a customer from a purchase.
- The business customer's overall payoff from buying and using a product.
- The net contribution to profit that should accrue to a business customer as a result of a purchase.
Purchase advantage
- The amount by which the purchase inducement of one offering exceeds the purchase inducement of another.
- The amount by which a customer is better off buying the more favorable of two purchase offerings.
Relative worth
- The price for a product at which a business customer would be no better off and no worse off than if it were to purchase its next best alternative.
- The sum of a product's differential value-in-use and the price of the customer's next best alternative.
- The price for a product that, from of a financial perspective, makes the product no better and no worse a choice than the customer's next best alternative.
- The price at which one offering's purchase inducement is the same as that of the customer's next best competing offering.
Total value-in-use
- The benefit a customer gets from a product when costs associated with its use, excluding price, are deducted from the benefits it delivers.
- Also often referred to as "use value" and, sometimes, simply "value."
- Within the domain of business products, value-in-use is the positive gain that accrues to a business as a result of using a product.
Value message
- The message a company delivers to potential customers that spells out how they will be better off selecting its product over competing alternatives.
- The message that identifies the points of positive differential value that set one company's products and services apart from its competitors.
© 2001 CustomerValueCenter