Consumer Values, Product Benefits and Customer Value
Javier Ramirez
Liberty University
BUSI 520: Strategic Marketing Management
Muriel Wilson
January 23, 2022
Consumer Values, Product Benefits and Customer Value
Many marketing researchers have maintained that detailed analyses of
consumption behavior are the fundamental basis for creating superior customer value for
consumers (Day 1990; Boyd and Levy 1963; Treacy and Wiersema 1993; Normann and
Ramirez 1993). The importance of a comprehensive analysis of customers' consumption
activities in planning effective marketing strategies was first pointed out by Boyd and Levy
(1963). They maintain that marketing strategies should be planned and implemented in
terms of the customer's needs and behavior patterns. Also, the core element of an effective
marketing plan is to think in terms of the "consumption system" in which the product plays
a part. Boyd and Levy defined a consumption system as "the way a purchaser of a product
performs the total task ... that he or she is trying to accomplish when using the
product C not baking a cake, but preparing a meal" (Boyd and Levy 1963, pp. 129-130).
Underlying this systematic view of consumption are at least two concepts critical to
customer value analysis. First, this systematic view looks beyond the purchase behavior of
buyers to the use behavior of consumers: "Whatever reasons people have for buying a
particular product are rooted in how they use that product, and how well it serves the use
to which they put it" (Boyd and Levy 1963, p. 130). Second, the systematic view emphasizes
the dynamic interrelations between the products that comprise a consumption system: "The
use behavior for a particular product is bound to be affected not only by ... the task to be
performed with the use of that product but also by the related products and their use
behaviors that make up the total consumption system" (Boyd and Levy 1963, p. 130).
Based on their observation of the holistic nature of customer judgment, Day et al.
(1979) advocated the application of customer-oriented approaches to defining a product-
market and then identifying its competitive structure. In particular, Day and his colleagues
endorsed a usage-situation approach to defining a product-market (or competitive)
structure. The usage-situation approach emphasizes that the anticipated use, the functions
to be served, and the consumption context of a product ultimately influence consumers'
choices among products/brands (Srivastava 1981). Although it takes a systematic view of
consumption, the usage-situation approach stresses that the substitutability among
products/brands in the usage-situation determines market structures (i.e., the competitive
providers) of the product-type in question (Srivastava, Alpert and Shocker 1984). While the
usage-situation approach is based on the holistic view of consumption behavior and is
dubbed customer-oriented, it deals only with companies' need to define their product-
market structures. It has nothing to do with the analysis of customer value and how this
value can be expanded. As Solomon (1983) points out, conventional marketing research has
paid much more attention to the substitutability of products than to their complementarity,
and the usage-situation approach is no exception. In summary, the literature on
consumption behavior analysis can proceed further to conceptualize the aspects of
complementarity-in-use of products through which consumer may derive product benefits
holistically in the product complement.
FIGURE 1
A FRAMEWORK OF PRODUCT VALUATION FOR CONSUMERS
CONSUMER'S PRODUCT VALUATION AND TYPOLOGY OF PRODUCT BENEFITS
The questions of how and what consumers perceive from products in the market
request the process and structure by which consumers value the products. Based on
consumption behavior analysis, the current paper proposes a framework of product
valuation for consumers and its typology of product benefits (see Figure 1). This model
stresses that to investigate the consumer's product valuation, it is necessary to integrate
cultural values, personal values, consumption values, and product benefits (Clawson and
Vinson 1978).
Cultural Values
Cultural, social, and familial environments affect the formation and development of
individual beliefs. In a socio-cultural environment, a set of values usually represents widely
shared beliefs about what is desirable. These socio-cultural beliefs are called cultural values
or "society core values" (Engel, Blackwell and Miniard 1990) and are implanted into
individuals "naturally" through socialization and education, perhaps with some modification
as personality and attitude moderate the learning process. For example, Kahle (1985)
proposes a "List of Values" (LOV) generic to American culture in the 1980s, such as self-
respect, security, self-fulfillment, fun and enjoyment in life, and warm relationships with
others. These cultural values are seen by some social thinkers as "objective" (Frondizi 1963).
This notion of being objective implies that they are commonly known to the members of a
society. However, not all of the cultural values in a society will be adopted unanimously by
its members. Some cultural values might be followed by only a small portion of the people,
while other values might be accepted widely. In sum, cultural values are generic beliefs
about what a society argues to be desirable and beneficial. These values are then freely
adopted on an individual basis.
Personal Values
Personal values are the individuals' beliefs about what are desirable to themselves.
They are self-centered; that is, personal values are closely linked to needs. Moreover, they
are derived from, and modified through, personal, social, and cultural learning (Clawson and
Vinson 1978). From a cognitive perspective, personal values are the mental representations
of underlying needs after the modification, taking into account the realities of the world and
reflecting the individual's personality (Wilkie 1990). For example, the cultural value of "self-
fulfillment" might be manifested quite differently in the minds of two individuals with
different familial and personal backgrounds.
According to Rokeach (1973), human values have two main types: terminal and
instrumental. Terminal (or end-state) values are beliefs people have about the goals for
which they strive (e.g., self-fulfillment, or enjoyment in life). Instrumental (or means) values
are beliefs about desirable ways to attain these terminal values (e.g., owning an elegant
house, or taking a vacation). Therefore, personal values generally correspond to terminal
values, while values of desirable activities (to be discussed next) are comparable to
instrumental values. Personal values are enduring beliefs which guide various actions and
judgments across specific situations. Hence, personal values are more abstract and may be
generalizable easier than values of actions. In other words, the concept of personal values is
similar to the idea of "global values" (in the realm of a person's perception) proposed by
Vinson et al. (1977); these are small in number (dozens) and considered to be at high levels
of conceptualization.
Consumption Values
Consumption values refer to subjective beliefs about desirable ways to attain
personal values. People achieve personal values (or goals) through actions or activities, such
as social interaction, economic exchange, possession, and consumption (Sheth et al. 1991).
According to means-end chain models of consumer product knowledge (Peter and Olson
1990), people may have ideas and preferences about various actions that can help them
achieve personal values. Therefore, relative to personal values, consumption values are
instrumental in nature. For example, owning an elegant house and acquiring a prestigious
car are for some people desirable ways of achieving self-fulfillment. Attending football
games (especially those of favorite teams) and taking a vacation trip are favorable activities
which lead to personal fun and enjoyment. Furthermore, individuals may hold several
personal values by which they direct or evaluate consumption activities. Therefore, the
consumption values of these types of activities (or possessions) are sophisticated and do not
simply satisfy one single personal value (Shet et al. 1991).
As we can observe in ourselves or others, consumption activities usually include an
assortment of goods and services (Boyd and Levy 1963). For example, "owning an elegant
house" requires house owners to acquire many goods and services in addition to the house
itself, just as "taking a vacation trip" involves many other related acquisitions. Moreover, in
a product constellation for a consumption activity, there may be some properties in
common. McCracken (1988) observes that "the consumer goods in any complement are
linked by some commonality or unity" (p. 119). From a social interaction perspective,
Solomon (1983) maintains that consumers employ product constellations in "setting the
stage" for the social roles they play. Product constellations occur, because individuals use
entire complements of products to achieve personal values. The products unified in a
constellation all carry the same information about individual values. Furthermore, Lai (1994)
maintained that consumers may obtain satisfaction holistically from the related
consumption activities and the constellation of products in use.
Consumption Schemata
Cognitive psychologists maintain that people may acquire knowledge structures to
represent various consumption activities and product constellations (Abelson 1976; Crocker
1984). Lai (1994) uses the term consumption schema to refer to the cognitive structure
which organizes and represents personal ideas and beliefs about the substance of a
consumption activity, such as interrelationships among complementary products, the
cultural value and social meanings of the commodities, and personal preferences and
affective associations. Hence, a consumption schema represents a consumer's basic
thoughts about a consumption activity, though peripheral adjustments may be needed to
accommodate the specific situation in which the consumption takes place. In short, in
consumption, or possession of products, people may acquire personal consumption
schemata (or a particular planned pattern), including their anticipation of and requirements
for a product (or a complement of products), reflecting their consumption values of that
consumption or possession.
Typology of Product Benefits
From the customers' perspective, products are viewed as a bundle of benefits, not
attributes (Day 1990; Peter and Olson 1990). In other words, "customers are less interested
in the technical features of a product or service than in what benefits they get from buying,
using or consuming the product." (Hooley and Saunders 1993, p. 17) In a competitive
market, in addition to their basic benefits, products usually have many other attributes, such
as features, styles, symbolism, durability, quality, and related services. By designing
products with combinations of these attributes, marketers try to attract consumers with
particular consumption values.
A comprehensive understanding of possible benefits that customers may seek in
products is a fundamental basis for marketers to formulate sound marketing strategies,
especially product differentiation or positioning (Peter 1990; Boyd and Levy 1968). Sheth et
al. (1991) categorize five product benefits which influence the consumer's choice behavior:
functional, social, emotional, epistemic and conditional. However, these benefits are only
generic; that is, they are general, potential, and not yet applied to a specific consumption
activity. Moreover, because Sheth et al.'s analysis is not grounded in a holistic approach to
consumption behavior analysis, Sheth and his colleagues conflate product benefits with
consumption values; that is, they do not distinguish "generic product benefits" from
"consumption values," as the current paper does. Furthermore, their categorization ignores
other important generic product benefits: e.g., hedonic benefits, aesthetic benefits, and
holistic benefits.
Going beyond Sheth et al.'s original categorization of product benefits (Sheth et al.
dubbed them as "consumption values"), the current paper proposes a typology of product
benefits that a consumer may derive from possession or consumption. The typology
includes eight generic product benefits: functional, social, affective, epistemic, aesthetic,
hedonic, situational, and holistic. The definitions of these terms are discussed briefly in what
follows:
(1) Functional benefit refers to a product's capacity for functional, utilitarian, or
physical performance. Functional benefits are derived from the tangible and concrete
attributes that a consumer may directly experience when using or consuming the product.
(2) Social benefits are the perceptual benefits acquired from a product's association
with social class, social status, or a specific social group. Highly visible products (e.g.,
clothing, jewelry, and automobiles) often carry social benefits.
(3) Affective benefit refers to the perceptual benefit acquired from a product's
capacity to arouse feelings or affective states. Affective benefits are often associated with
cultural-ethnic meanings (e.g., Christmas trees, Thanksgiving turkeys) or personal,
idiosyncratic meanings, tastes and memories (e.g., foods that arouse feelings of comfort
through their association with childhood experiences, or cars with which consumers are said
to have "love affairs").
(4) Epistemic benefit refers to the benefit acquired from a product's capacity to
satisfy curiosity, provide novelty, and/or meet a desire for knowledge. Exploratory, novelty-
seeking, and variety-seeking consumption behaviors are examples of epistemic value
pursuit. Also, a consumer's propensity to adopt new products is consistent with epistemic
benefit (Sheth et al. 1991).
(5) Aesthetic benefit refers to the benefit acquired from a product's capacity to
present a sense of beauty or to enhance personal expression. Aesthetic benefit usually is
subjective and idiosyncratic. Style demands, product-appearance demands, art purchases,
and fashion-following are examples of consumers' pursuing aesthetic benefits.
(6) Hedonic benefit refers to the benefit acquired from a product's capacity to meet
a need of enjoyment, fun, pleasure, or distraction from work or anxiety. Olshavsky and
Granbois (1979) claim that hedonic benefit is an important dimension of many products.
People are not always looking for rational or "serious" benefits; they may want to relax or
be distracted. Taking a vacation trip, going to bars, watching sports, comic movies or TV
programs, or even buying funny trinkets to make fun of friends are examples of hedonic
benefit pursuit.
(7) Situational benefit refers to the benefit acquired from a product's capacity to
meet situational needs in specific circumstances. A product acquires situational value in the
presence of antecedent physical or social contingencies that enhance its functional, social,
or other benefits. Situational benefit is measured on the profile of a particular consumption
situation.
(8) Holistic benefit refers to the perceptual benefit acquired from the
complementarity, coherence, compatibility, and consistency in a product constellation as a
whole. Holistic benefits are frequently required and perceived in clothes, furniture, and food
consumption. Holistic product benefit is a result of "synergy" derived from a product
combination. Its implications for marketing strategy will be discussed later in detail.
Different types of product benefits may be correlated and combined in particular
consumption activities, or there may be trading off between them. In addition, a product
may offer multiple generic benefits. For example,
"to a first-time home buyer, the purchase of a home might provide functional
[benefit] (the home contains more space than the present apartment), social [benefit]
(friends are also buying homes), emotional [benefit] (the consumer feels secure in owning a
home), epistemic [benefit] (the novelty of purchasing a home is enjoyable), and situational
[benefit] (starting a family)" [The braces are the author's, to substitute the word "benefit"
for the original word "value" and avoid confusion. The parentheses, however, are in the
original passage.] (Sheth et al. 1991; p. 163).
Perceived Product Benefits
Generic product benefits are intended benefits that manufacturers design into a
product. However, these intended benefits may or may not be perceived or appreciated by
particular consumers. A product has benefit to customers to the degree that they can
perceive, appreciate and then use that product as anticipated consumption activities to
achieve personal values. Normann and Ramirez (1993) recapitulate this concept well; "A
company's offerings have values to the degree that customers can use them as inputs to
leverage their own value creation. In this respect, then, companies don't profit from
customers. They profit from customers' value-creating activities" (p. 74). In sum, consumers
perceive and appreciate product benefits via their personal consumption values and
consumption schemata; these product benefits are termed "Perceived Product Benefits"
(Day 1990).
In summary, the framework of consumers' product valuation delineates the
relationship between "personal values", "generic product benefits", and "perceived product
benefits" via "consumption values" and "consumption schemata" (see Figure 1). That is, it
illuminates the structure of consumers' product valuation and how and what benefits
consumers may perceive from products. With this framework of product valuation for
consumers and its typology of product benefits in place, the current paper proceeds to
investigate the concept of customer value.
A MODEL OF CUSTOMER VALUE FOR CONSUMER MARKETS
Customer Value and Consumer Values
Many marketing strategists and industrial-organization (I.O.) economists emphasize
that creating superior "customer value" is a key element for companies' success (Day 1990,
Porter 1980). However, what they mean by "customer value" is quite different from the
meanings of the "consumer values" we have discussed above. "Value" to marketing
strategists means a return for something in an exchange (e.g., the value of the dollar is
variable). Therefore, the meaning of "customer value" is a level of return in the product
benefits for certain amount of customer's money (i.e., the price) in a purchase exchange
(e.g., to give the buyer good value at the right price). In addition, the concept of customer
value has by nature a normative perspective, since it is a fundamental concept underlying
the competitive analysis in the field of I.O., based on economic principles and the
customer's choice in the market.
Consumer behavior researchers, on the other hand, generally use the word
"values" to mean something desirable, useful, or important (Peter and Olson 1990). Our
previous discussion also adopted this meaning. Consumer research usually is based on a
descriptive-study perspective, such as in the fields of anthropology, sociology, and
psychology. Therefore, "consumer values" refers to the important personal goals that
consumers are seeking (Wilkie 1990). Furthermore, consumer behavior researchers
emphasize that people can achieve some of their personal values through possession or
consumption of products (Peter and Olson 1990; Sheth, et al. 1991).
In summary, "customer value" normatively focuses on a buyer's evaluation at the
time of a product purchase, while "consumer values" descriptively stresses people's
valuation of product consumption or possession. Consumer researchers will argue that
consumers buy products not for the sake of its "transactional value" (a simple term for
customer value) but for the product's benefits that will satisfy their needs or personal
values. Our earlier discussions of the process of consumer valuation explored the domain of
consumer benefits in product consumption or possession. However, in an exchange
environment, product benefits alone do not completely explain consumers' product choice.
Often, consumers may find products very desirable. Yet, in assuming that the consumer has
adequate financial capacity, one must not equally assume that a purchase must follow.
These cases imply that normative points of view are also necessary in consumer choice
research. From an economics perspective, consumers may apply cost-and-benefit
evaluation to a purchase decision, at least when the costs are "significant" to them
(Olshavsky and Granbois 1979). Therefore, with respect to a sound customer value analysis
for a consumer market, both the descriptive and normative aspects are essential (Boyd and
Levy 1963; Day 1990).
The current paper proposes a comprehensive model of customer value for
consumer markets (see Figure 2), based on Day's original idea of "value equation" and
emphasizing customers' perception (Day 1990). This model integrates descriptive and
normative points of view about consumer behavior, including the consumer values
expectation before purchase, customer value evaluation at the time of buying, and value
actualization in consumption or possession.
