Chapter 3 Delivering Customer Perceived Value at the Urban Bottom of the Pyramid in India – Decoding Customer Value at the Bottom of the Pyramid

CHAPTER 3

Delivering Customer Perceived Value at the Urban Bottom of the Pyramid in India

Introduction

After getting a fair idea of what constitutes value in the Urban Bottom of the Pyramid segment in India there is a need to adopt a delivery framework. This chapter details on the appropriate framework and its delivery mechanism.

One of the most popular mechanisms to deliver value by a firm, practiced and taught across business schools over the world is the, “Marketing Mix.” It is commonly referred to as the 4Ps. The application of this framework is pervasive across business situations globally but it is an organization oriented framework that works from a decision-making perspective. There has been a need for a customer oriented marketing decision framework. This need is met by the “4As” framework developed by Sheth and Sisiodia (2012). It takes a customer oriented view in organizations and helps in thinking like a customer. The marketing mix 4Ps framework has been further modified for the services sector which considers 7Ps instead of 4Ps. The former was aligned to the goods dominant logic whereas the latter has been aligned to services dominant logic. The earlier 4Ps were; product, price, place, and promotion. The three additional Ps are People, Processes, and Physical Evidence. The Perceived Value construct has been conceptualized from the customer’s view and thus it may be imperative to start the thought from the customer rather than the organization approaching the customer through different Ps. This is one of the limitations of the Marketing mix framework, even the extended one though the 7Ps are better customer aligned. The 4As thus serve the purpose better. The framework is first described in the following section and then adapted for delivering value in the bottom-of-the-pyramid segment.

The 4As framework starts by describing that in any marketplace transaction the customer plays different roles, typically four. The four roles are (Sheth and Sisiodia 2012);

  • SEEKER: The customer seeks information about the product
  • PAYER: The customer pays for it in terms of time, effort, and money
  • BUYER: The customers select and acquire the product
  • USER: The customers consume the product

It is possible that an individual or an organizational entity might play one or more of these roles in combination with other individuals or organizations. In a manner the customer’s consumption of value does not happen as a whole but it is broken into parts. To consummate a sales all these parts have to be completed with full satisfaction of the entity playing that role. Marketing Managers must understand the difference between each role to deliver satisfactory value to the customer because each role lays emphasis on different aspects in a transaction. The authors of the framework highlight that the customers seek different market values from organizations based on the role that they are playing. It is important for companies to understand the values and characteristics that shape each role. There are different wants and desires that shape each role. The seeker may look for sufficient information about the offering. The users may focus on the product characteristics (such as efficiency, functionality, and reliability) apart from the experiential elements. For the payer the offering’s total price is paramount. The buyer would desire a frictionless way to acquire the product. It is important to note that the seeker role is primarily associated with the “Awareness” of the offering, the user role deals with the “Acceptability” of that offering, the payer role relates to “Affordability” of the offering, and the buyer role deals with the “Accessibility” of the offering. In a business context the concept of buying center has prevailed which would include different departmental representatives playing these roles. There would be a user department, a finance department to decide the payment terms, people in procurement department who would be doing the process of purchase for the organization to illustrate a few. The authors further elaborate that in each role the customer seeks different values. It emerges that in each role the customer seeks two kinds of values as explained below. In the role of the user the values are performance and social. Each of the value defined in the original framework is being described as is;

  • Performance Value refers to how effectively and consistently a product serves its principal function. It depends on the technical core of the product and thus depends on the quality of its design, engineering, and manufacturing.
  • Social Value—Consumers purchase products not only for their physical characteristics but also for the social and emotional elements they provide. These could be sensory enjoyment, attainment of desired mood states, achievement of social and ego goals. Social value surfaces in products/brands that are perceived positively in important groups for the customer. Users for whom social value is important choose products that convey an image that they believe could help them fit in with a desired group or initiate new social relationships. Social value also considers market choices that arouse or satisfy an emotion.

Customers who are in the role of payers seek two important types of market values;

  • Psychological: Psychological value of the customer refers to the consumer’s willingness to pay the exchange price for what is being offered. When firms charge a premium on an offering the customer must perceive it to be fair. This would take into account the total costs incurred in acquiring the product.
  • Economic Value: Customers not only have to be willing to pay the price asked but also be able to economically afford the price being asked. The availability of credit options is one such strength that customers especially from the developing economies value a lot.

As buyers, consumers are concerned with availability value and value offered in convenience.

  • Availability Value: Availability covers an adequate supply of the core offering along with the necessary accompanying services such as the pre and post purchase consultancy and help in keeping the product’s usability. Many times marketers are able to build a strong demand but they are not able to close a deal because of the lack in supply. The reason for the gap could be poor sales forecasting, inadequate manufacturing capacity, a shortage of key components, transportation bottlenecks, or any other.
  • Convenience Value: The customer must spend some amount of time and effort to acquire a product. The distance and time where the product must be made available must be customer friendly. The merchandise accessibility must also be according to the customer. The convenience value increases in proportion to the decrease in terms of consumer spend in time and effort.

Consumers in seeker’s role seek happiness, fulfillment, satisfaction, new and exciting experiences and solutions to the problems. People over time continuously seek ways that would improve the quality of their lives. Mature customers many a times look forward to meet higher order needs such as self-actualization or enlightenment. Customers in seeker roles continuously absorb information about product offering so that improves the quality of their lives. Customers as seekers may be Active or Passive. The seeker role has two dimensions: education and inspiration. The need for education is to gain mastery over their work domain is very basic to human beings as learning beings. Apart from this they also need inspiration; the spark to ignite their imagination which will help to consume life in a novel and compelling manner. Inspiration is essential for customer to act on the information they gather. It is important to note that the information technology revolution has changed the role of customers as seekers. Consumers today have stopped being passive recipients of poorly targeted information. The traditional mass media based marketing approaches do not fulfill the needs of customers as seekers. Interested customers are now active participants and content has to be designed in a specific manner to reach them. Marketers need to follow the 4As framework to satisfy the customers in each of the four roles. Before discussing the 4As framework in detail there is an important understanding related to the BOP context that needs to be incorporated.

As emerged through the grounded theory research and elaborated through the narratives in Chapter 2, the family dimension is very important for the Urban BOP Indian customers (Figure 3.1). The Urban BOP customer irrespective of the product category is satisfied through the family related need satisfaction. Irrespective of his role across product categories in the purchase decision, the decision is taken as a collective decision. This is a radical departure from the way marketing has traditionally viewed the customer in different roles and decision making with an individual orientation. The family/household is considered as the decision-making unit rather than the individual.

Figure 3.1 Customer roles and market values in the urban India BoP context (adapted from Sheth and Sisodia 2012).

Sheth and Sisodia define the 4As as:

Awareness: The level to which the customers are informed of a product’s characteristics, are persuaded to try it, and reminded to repurchase it. Awareness comprises of the following dimensions:

  • Brand Awareness indicated by factors such as brand recall, associations, brand attraction, and perceived brand characteristic.
  • Product Knowledge indicated by factors such as interest, understanding, involvement, and so on.

Acceptability: the level to which the firm’s total product offering meets and exceeds the needs and expectations of customers in the target market. Acceptability is concerned about two dimensions:

  • Functional Acceptability: covered by factors such as core attributes and capabilities, functionality, ease of use, quality, reliability, and so on.
  • Psychological Acceptability: covered by points such as brand image indicated by reputation, positioning and personality, styling, social value, emotional value, perceived risk, and so on.

Affordability: the level of willingness that customers in the target market have to pay the product’s price which includes both monetary and non-monetary price. It comprises of two dimensions:

  • Economic Affordability: is the ability to pay which is indicated by factors such as income, time and effort required, assets, financing, fit within the budget
  • Psychological Affordability: is the willingness to pay indicated by factors such as perceived value for money, perceived fairness, price relative to alternatives

Accessibility: the level to which customers are able to readily acquire and use the product. The two dimensions are:

  • Availability: observed by factors such as supply relative to demand, products being stocked, related products and services
  • Convenience: indicated by factors such as effort and time required to acquire a product, packaging in convenient sizes, and the ease to which the product can be found within and across locations

Measuring the 4As

The authors have provided immense help by not only providing the framework but also giving a measurement framework that is mentioned below.

For a firm to get the full advantage of the framework all the 4As must be measured and score high on all the 4As. Each of the A is measured on a 0–100 percent scale with respect to a given target market. The market value coverage (MVC) is calculated by considering each of As measured independently and then multiplied. The MVC serves as the measure of the effectiveness of the overall marketing program in ensuring the highest probability of the prospects being converted into actual customers. The four elements are not compensatory. They do not substitute each other rather a firm must do good on all the four dimensions to be successful and if it fails even in one dimension it will fail overall. Just to illustrate if the firm scores 100 percent on two dimensions but only 50 percent on the remaining two dimensions it will be able to achieve only 25 percent of its focused market (100*100*50*50). Similarly if all four dimensions are at 25 percent it will achieve only 0.39 percent. If it achieves zero in any one it will become zero in total. To achieve the market coverage at the Urban BOP in India the firm must create value in all the four areas that cut across the family dimension in different buying roles. If we start understanding customer perceived value from the customer angle it may be observed that the customer wants all; functional, social, hedonic, epistemic, and conditional value but all cutting through the family dimension. To achieve high MVC marketers must create value in all four areas. Customers do not expect trade-offs whereas Managers are often trading off.

During the grounded theory interviews the role of family as a collective unit emerged as being very important at the bottom of the pyramid segment in the urban India context. It is different from the way family context and family decision making have been studied in the marketing literature. The decision is not in terms of individual buyer roles but irrespective of the product category the decision itself is a collective household decision across product categories. By family the meaning is a system with average 5–6 family members that stay together in a single household premise. They share (resources) food, accommodation, and life together. The responsibilities are divided in terms of working adults in the age group of 25–60 years taking the responsibility of young children or elderly parents. Many times it is just the parents and the young children with grandparents in native village/town or it is the dependent parents living with adult working children. The decision making is different in a family above the bottom of the pyramid segment. The disposable income is a surplus resource as opposed to the BOP segment where it is a scarce resource and therefore there is quite latitude available in deciding how to spend and where to spend. Thus there could be a difference in the expectations and benefits from a purchase, the way roles exercise themselves in decision making, communication would be different and firm’s marketing strategies may also be different. All this will lead to a difference in customer perceived value and satisfaction derived through or after the purchase.

It is thus worthwhile to understand the concept of family as studied in the research literature of buyer behavior in Marketing before understanding its placement in the customer’s perceived value equation, specifically in the context of urban Indian BOP customer. Family as a consuming and decision making unit have remained a central phenomenon in the marketing domain but research has largely focused on a few aspects about family decision making while several of them have been left. The focus has been largely on questions such as (Commuri and Gentry 2000):

  • Who decides?
  • What are the consumption implications of women in labor force?
  • Can the relative influence of husbands and wives be determined?
  • Does the family lifecycle matter?

There are issues in the family dynamics beyond these which impacts their behavior. These behavioral responses are important for the customers. The restrictive idea of family in consumption decisions need to be removed and one such idea is “customer perceived value.” Family research has largely focused on decision outcomes in terms of who makes the final decision rather than on decision processes (how do they arrive at decisions). Secondly, most theories in psychology on behavior and personality touch behaviors at individual level and if family is not a sum of individuals, individual theories of behavior and personality do not facilitate an explanation of behavior observed in families.

Most of the family research has been on decision roles—who makes what decisions? Since 1955 when the research on this topic began it centered on the role of husband and wife in decision making across a diverse set of product categories. The study has been adapted with a shift in decision role stages by Cunningham and Green (1974) and the kind of decisions; joint, syncretic, and autonomic in family decision behavior (Davis and Rigaux 1974). Research has also focused on decision role structure across decisions. It was found that husbands dominated decisions for certain product categories and wives for some (Belch et al. 1985) but the focus of most of the studies was on individual decisions. It was also debated that decision roles studied were over simplified. Responses from one spouse may not be sufficient to understand the roles and family decisions. Researchers explored the possibility of a multidimensional definition of power and influence (Davis 1971, 1976; Davis and Rigaux 1974). It was suggested that the entire decision-making process was relooked (Wilkes 1975).

Subsequent research paid attention to the determinants of relative influence and thus to the decision roles; for illustration Rosen and Granbois (1983) found that sex role attitudes (whether traditional or not) and education were the most relevant determinants. Parallel to some feminist work in the area of women’s employment, Rosen and Granbois reported that the reason for the wife’s employment was also a critical factor in determining role structure. Joag, Gentry, and Ekstrom (1991) developed a role/goal model of wife decision making that incorporated both work status and motivation for working.

As highlighted by the authors the subject of relative influence can be considered as a subset of decision roles. The outcome of a decision may be equally satisfying to both husband and wife but for different reasons. The authors write that the nature of the decision gets complicated because of the involvement of more than two players in decision making. There was a need for a multi-dimensional typology to understand family decision making as there could be misperceptions related to joint decision making. Park 1982 suggested that the process of joint decision making was one in which couples muddled rather than steered according to a predetermined strategy. The emphasis on conflict resolution as the driving force through each stage and the classification of product attributes in terms of their role in resolution of conflicts was an important area for understanding of marketing researchers. The role of couples and their children has also been studied and the underlying causes of differences in relative influence also remain unexplained (Filiatrault and Ritchie 1980).

As per the authors much of the relative influence research has apparently been conducted from a competitive perspective implying an either-or kind of mentality on the part of the spouses. Qualls 1988 states, “influence is defined in the present study as the perception of one action taken by one spouse to obtain his or her most preferred decision outcome while simultaneously stopping the attainment of their spouses’ most preferred outcomes.” A cooperative perspective might look harder for implicit as opposed to explicit measures of influence. Such a perspective would suggest that many family decisions do not constitute only conscious choice, but also incorporate a shared consensus, mutual trust, and the desire to maintain harmony. Sillars and Karbflesch 1987 conclude that implicit adjustment does not occur smoothly. Further, highly implicit transactions are limited to more homogenous and stable relationships where the shared experience of individuals allows them to fill in considerable taken-for-granted feeling.

Since concern for family emerges an important dimension in the purchase behavior of the urban Indian BOP customer and this segment presents market opportunity it is important for firms to understand what satisfies this customer, how does he make the purchase decision and what should be the focal point to differentiate. This point has been detailed in Chapter 2.

BOP in Other Family Contexts

In line with the idea of researching the “how” of family decision making rather than “who” the Chapter 2 narrative interviews in detail explore that. It is important to understand how family has been understood in other contexts also. There is not much literature available though on the subject with reference to the bottom of the pyramid customer context. Authors Chickweche, Stanton, and Fletcher (2012) studied the family purchase decision making at the bottom of the pyramid in the context of Zimbabwe. The study nature and findings being close to the subject of the book makes it worthwhile to be mentioned. The authors explain how the makeup of the family and its role in individual lives vary from market to market as observed in the Western or Emerging or BOP markets. The concept and definition of family itself would be different in the latter two contexts. The western markets focus on the nuclear family comprising of father, mother, and siblings. The BOP markets are more likely to extend the concept of extended family comprising of nuclear family plus relatives. In the context of urban BOP in India the family may be living in two parts/two locations; the nuclear one in the city and grandparents (father’s side) in the village or hometown. This in no case implies that western markets do not have the concept of extended family but the proportion and scope varies. “Family” has been acknowledged in the management literature yet the literature is largely derived from the developed markets. The emerging markets still have to be understood in detail, differences in the Eastern and Western philosophies could reflect in the structure of the family, their roles and decision-making processes. The family purchase decision also has to be understood in different markets under differing environmental constraints. As already acknowledged through the literature on family behavior of different themes the ones pertinent to be studied at BOP important ones could be roles, what factors lead led to adoption of these buyer roles and can an individual play multiple role, gender influence on roles, sex orientation in different kinds of individuals, joint and autonomic decision, nature of products under purchase (low involvement/high involvement). The research majorly considers all these under high involvement context but assumes that low involvement being habitual purchases does not require joint decision making. The western developed markets may hold this but the BOP markets do not agree to it because for them every decision is a joint decision as a result of income constraint. Wiliams and Burns (2000) advise to expand the scope of investigations. The potential impact of economic and social constraints also needs to be considered. The role of children also needs to be looked closely with reference to decision making in BOP markets. The impact of gender and spousal changes may also vary between Developed and BOP markets,

The authors cite that Zimbabwe is a BOP market that has been subjected to policy induced risks which has created social conflict, political instability, and economic mismanagement which is found in many emerging economies. In Zimbabwe this created population movements and gave rise to different BOP groups referred to as diluted urban, urban based, rural-urban based, and rural based. While such a classification is not available in India the study used the Unitus Ventures* pyramid to identify the urban BOP. The profile of the customers has been highlighted in Chapter 2. The authors in the Zimbabwean context followed a mixed method research with interviews and focus groups drawn from all the four groups. However, the Indian study concentrated only on Urban BOP typically residing in metros, working in the informal sector comprising both locals and immigrants. The data for Zimbabwean study was collected between 2006 and 2008. Apart from focus group discussions and qualitative customer interviews, ethnographic observations were also done. The techniques permitted multiple sources of information from multiple approaches, a kind of triangulation. The authors also lived with the informants in their environments to enrich the insights. Since the food and personal hygiene products from 65 percent of the purchase basket of the customers in Zimbabwe, these categories were chosen for the purchase decision. Random purposive sampling was done to improve the credibility of the sample. The text data was analyzed using condensation, categorization, narration, interpretation, and ad hoc approaches. Condensation reduced the text to succinct summaries. Categorization reduced the data to categories, figures, and tables. Narrative structuring was done by creating a coherent structure and plots of data. A re-contextualization of the statements within a broader framework of reference from literature was done for interpretation of the text. NVIVO software was used for the analysis of the data. The findings of the study are reported only for the urban BOP customers in Zimbabwe followed by a comparison with the Indian urban BOP.

The family structure of this group comprised of a husband as the head of the family comprising of his wife and children. The concept of family included extended family typically living in rural areas. This characteristic is common for the Indian urban BOP. A very unique and prominent characteristic was that every purchase was deemed to be important by the customer. Thus food and personal hygiene were important and high involvement categories for them. Under the condition of limited income each time they had to make sure whether they were purchasing right. The categories were considered to be complex decision categories. This condition is similar to India. Because of the economic conditions there were three types of purchase behavior reflected in the group; buying products as and when available, or when needed, or when they could afford them. Product categories were normal which forced them to purchase products as and when they found them. An important finding was the tendency to make sacrifices by these consumers to buy products at times when they did not have the money to do so. This was done for two reasons:

  1. Ready availability of the products
  2. To take advantage of value in price terms

Both these characteristics are common to the Indian urban BOP.

Differences in family decision models have been explained in the study using the consumer roles theory of initiator, decider, buyer, user, and gatekeeper. However, through the research gaps it is now relevant that family decision models are also explored through other means and beyond this framework only. Traditionally, across the globe women had an overriding role in the purchase of food and personal hygiene with husband and children being the user. But there was a change in the urban BOP segments where husbands and wives shared the responsibility of purchasing the products in these categories. The gender-based approach had changed. Any one of the two who found the products at cheaper prices. While the approach is observed in India as well yet here the decision is most of the time joint in nature even at the start of it. All factors are shared and concerned at the beginning itself.

In the Zimbabwean study (figure 3.2) because of the economic conditions the focus was price and thus anyone who found a better deal initiated the purchase. This behavior was different from India where the discussion started prior to the purchase and it was decided as to who would start that as well. The study noted that the husband was more responsible for purchase in the shared gender role but there was no consensus amongst the participants who also considered women playing an important role. It was a similar situation as in India.

Figure 3.2 Adapted from Jensen 1990

The role of children reflected their little influences at the younger ages in product categories such as food and personal hygiene. The influence was observed to be stronger in the categories with children in later stages of the family lifecycle where they became responsible for buying their parent’s personal food and hygiene products. Multiple roles of children in the purchase decision were evident where adult children were responsible for the support of their parents and siblings. This group called the “working children” assumed the roles of decision makers, influencers, and purchasers of actual products. Many a times the decisions were initiated by the parents with the children, where ultimately the call was taken on availability and price with users including everyone in the family. The findings were similar in nature to India. While the Zimbabwean study did not reflect the influence of children in different age groups, in India the role of the children till adolescence was largely of users rather than influencers. The role only changed when they started earning and became an income generating resource for the family, where they started playing the role of the decision maker or influencer which was also minimal. Only when they reached the ages of 20–22 years or assumed larger role and responsibility in running the family that their weightage in the decision whether as decision maker or influencer changed. It is important to note that the role of an individual in the family and the responsibility attached decided the role in the purchase decision irrespective of age.

Figure 3.3 Adapted from Jensen 1990

Because of the tough economic environment interviews from the urban BOP who wanted to consider the influence of their children in the purchase decision were not able to do so. This is similar to the Indian case where money is an important decision constraint. This is unlike the higher income groups which can accommodate the children’s concern in the decision.

Figure 3.4 Adapted from Jensen 1990

The findings of the study (Figures 3.2 to 3.5) and its contrast with India highlight the importance of doing such studies by academicians and practitioners. The main reason is that there is a need for marketers to understand the heterogeneity of the BOP market and the dynamics of the family purchase decision process that takes place and is different from the western developed counterparts where both practice and theory have been developed. Marketing models needs to incorporate the different roles played by men, women, and children in the purchase decision process and accounting as value for them. It is important for suppliers to understand the relevance of social networks and buying groups for the BOP consumers and design distribution systems accordingly. The appropriateness of such distribution system to the marketing environment is important. These social systems are then further used for such marketing activities such as marketing communications.

Figure 3.5 Adapted from Jensen 1990

Evolution and Contextualization
of Customer Perceived Value

In Chapter 1, the concept of value was discussed. It is again being revisited in slightly more detail to understand different conceptual perspectives briefly followed by the way it has been measured. Table 3.1 presents the select definitions of customer perceived value as reviewed by Kainth and Verma (2011).


Table 3.1 Select definitions of customer perceived value

Source/year

definition

Zeithaml (1988)

Value is the consumer’s overall assessment of the utility of a product based on perceptions of what is received and what is given. Value denotes the conceptual trade-off framework of what is received and what is given. Four diverse meanings of value that were identified are: value is low price; value is whatever one wants in a product; value is the quality that the consumer receives for the price paid; value is what the consumer gets for what he or she gives. It describes the post-consumption value. The components (benefit and sacrifice) are covered in the dimensions given

Day (1990)

Perceived customer value is the surplus between customer’s perceived benefits and customer’s perceived costs

Perceived customer value= customer’s perceived benefits– customer’s perceived costs

Monroe (1990)

Buyers’ perceptions of value represent a trade-off between the quality and benefits they perceive in the product relative to the sacrifice they perceive by paying the price

Urbany and Bearden (1989)

Perceived acquisition value is the buyers’ net gain (or trade-off) from acquiring the product or service

Lichtenstein, Netemeyer, and Burton (1990)

Perceived transaction value is the perception of psychological satisfaction or pleasure obtained from taking advantage of the financial terms of the price deal

Dodds et al. (1991)

Perceived customer value is the ratio of perceived benefits relative to perceived sacrifice

Anderson, Jain, and Chintagupta (1993)

Value in business markets is the perceived worth in monetary units of the set of economic, technical, service, and social benefits received by a customer firm in exchange for the price paid for a product, taking

into consideration the available suppliers’ offerings and prices

Gale (1994)

Customer value is market perceived quality which is adjusted for the relative price of the products. It is your customer’s opinion of your products/services as compared to that of your competitors

Holbrook (1996)

Value is “an interactive relativistic preference experience.” Value is interactive because it involves an interaction between some subject and some object. It is relativistic because it is comparative (among objects), personal (across consumers), and situational (specific to the context in which the evaluative judgment occurs). It is concerned with the consumption experience resulting from the use of an object or the appreciation of an object

‘Ravald and Gronroos (1996)

Value is considered to be an important constituent of relationship marketing and the ability of a company to provide superior value to its customers is regarded as one of the most successful strategies for the 1990s. This ability has become a means of differentiation and a key to the riddle of how to find a sustainable competitive advantage


Source: Adapted from Kainth, J.S., and Verma, H.V. 2011. “Consumer Perceived value: Construct Apprehension and its Evolution.” Journal of Advanced Social Research, no. 1, pp. 20–57.


While studying the literature the most comprehensive work done on perceived value was observed to be done of Sheth, Newmann and Gross (1991). The authors studied 650 papers across disciplines that included economics, sociology, different relevant branches of psychology, marketing, and consumer behavior. The authors have not called their theory as theory of perceived value but what they write is on understanding the consumption values in a purchase decision. The theory focused on consumption values explaining why consumers choose to buy or not buy, use or not use a particular product, the reasons for consumers to choose one particular product type over another and one brand over another. The authors have tested the theory in the context of consumers considering smoking and the decision to purchase or not purchase, use or not use cigarettes, the choice of one cigarette over another and the choice of one cigarette brand over another. Although there has been research on perceived value after that as illustrated from the table yet this is a seminal work that has set the direction in the literature. Other researchers have used it extensively to develop the thought.

Taking the work of Sheth et al. before defining the consumption values the three propositions on which the theory rests are:

  1. Consumer choice is a function of multiple consumption values.
  2. The consumption values make differential contribution in any given choice situation.
  3. The consumption values are independent.

The theory has identified five consumption choice behaviors
(Figure 3.6). Research of customer values has used this theory in different context, while this remains at the base. The values discovered are functional, social, emotional, epistemic, and conditional. Each value is now described in detail.

Figure 3.6 Values influencing consumer choice, adapted from Sheth, J.N., Newman, B.I. and Gross, B.L. 1991. Consumption Values and Market Choice. South Western Publishing Company, Cincinnati, OH.

Functional Value: Sheth et al. quote the functional value of an alternative as, “the perceived utility” acquired from an alternative’s capacity for functional, utilitarian, or physical performance. An alternative acquires functional value through the possession of salient functional, utilitarian, or physical attributes. Functional value is measured on a profile of choice attributes. The functional value has traditionally been held as the prime driver of consumer choice. It supports the economic utility theory (Marshall 1890; Stigler 1950) that popularly finds expression as “rational economic man.” An offering’s functional value may also be decided by its characteristics or attributes such as reliability, durability, and price.

Social Value: the authors have defined social value as, “the perceived utility acquired from an alternative’s association with one or more social groups.” An alternative acquires social value through association with positively or negatively stereotyped demographic, socioeconomic, and cultural ethnic groups. Social value is measured on a profile of choice imagery. The authors write that choices involving highly visible products such as clothing, jewelry to be shared with others are often goods/services driven by social value. The authors have considered social value by researching theories in other areas. The notable ones amongst those are Warner and Lunt’s (1941) work on social class, Hyman (1942) work on reference group, Rogers (1962) work on diffusion of innovations, Veblen (1899) work on conspicuous consumption, and Robertson’s (1967) work on social values with respect to consumer choice as a result of interpersonal communication and information.

Emotional Value: the authors have defined emotional value as the perceived utility acquired from an alternative’s capacity to arouse feelings or affective states. An offering acquires emotional value when associated with specific feelings or when precipitating or perpetuating those feelings. Emotional value is measured on a profile of feelings associated with the alternative.

Goods and services have been associated often with emotional response. Emotional value has been associated thus with aesthetic alternatives however they are applicable to tangible products as well. The authors have conceptualized emotional value based on motivation research carried by Dichter (1947) that elaborated how consumer choice can be driven by noncognitive and unconscious motives. The authors have also considered the research in atmospherics and advertising regarding how marketing and promotional mix variables arouse emotional responses that can be attributed to marketed products (Martineau 1958; Zajonac 1968; Kotler 1974; Holbrook 1983; Park and Young 1986). The nonverbal information processing that works on hemispherical brain lateralization (Orstein 1972; Hansen 1981) which addresses the specialized functioning of the two sides of human brain for both verbal and pictorial information.

Epistemic Value: the epistemic value has been defined by the authors as the perceived utility acquired from the alternatives’ capacity to arouse curiosity, provide novelty and satisfy a desire for knowledge. An offering acquires epistemic value by referring to items of curiosity, novelty, and knowledge. When a customer is bored or saturated with the existing offering, or is curious or has a desire to learn then the change of pace/change of experience or a totally new experience will provide him with epistemic value. The research on epistemic value has considered different kinds of exploratory, novelty seeking, and variety seeking behaviors of customers for activating product search, trial, and switching behaviors (Katz and Lazarsfeld 1955; Howard and Sheth 1969; Hansen 1972; Hirschman 1980). Berlyne’s (1960, 1970) works on optimal stimulation and arousal has been included where he contends that individuals are driven to maintain an optimal or intermediate level of stimulation. Customer innovativeness or a consumer’s propensity to adopt new products has been incorporated as conditional value (Rogers and Shoemaker 1971; Hirschman 1980).

Conditional Value: the authors define conditional value as “the perceived utility acquired by an alternative as the result of a specific situation or circumstances facing the choice maker. An offering acquires conditional value in the presence of antecedent physical or social contingencies that increase its functional or social value. Conditional value is measured on a profile of choice contingencies.” The authors state that the offering’s utility would depend on the situation. Products often have situation based associations such as popcorns and movies.

The five values identified make differential contributions in different choice contexts and they are proposed as independent values, adding relatively and contributing incrementally to customer choice. Further customer perceived value has been identified as an antecedent for creating customer satisfaction, repurchase intention, and loyalty (Linetal 2015). Apart from the Sheth et al. work on consumption values, customer perceived value has been conceptualized by other researchers. It is relevant to understand how research has considered customer perceived value in terms of dimensions.

Value Hierarchy Model

Septa et al. (2016) write that according to this model (Figure 3.7) customer desired value has been divided into three levels; desired attributes, desired consequences, and desired end states referred to as goals.

Given by Woodruff (1997) this model defines CPV as customer’s perceived preference for an evaluation of those product attributes, attribute performances and consequences arising from use that facilitate or block achieving the customer’s goals and purpose in use situations.

Figure 3.7 Value hierarchy model of customer perceived value

Utilitarian and Hedonic Model

This approach talks of customer perceived value being dichotomous in nature; utilitarian and hedonic, that is, a firm’s product would be valued on the basis of its performance or functions along with the experience that customers would get in the product consumption. The latter would include symbolic and hedonic aspect. Only the three broad research directions in value have been mentioned to help the reader understand the boundary line through different streams taken in academic research. The commonalities in definitions are around the components of value that form the major themes (Table 3.2).


Table 3.2 Commonalities in value definitions

Components

Source/year

Combination of all factors qualitative and quantitative; objective and subjective to form a consumer’s buying experience

Schechter (1984) cited in Zeithaml (1988)

Interaction between some subject and some object

Holbrook (1996)

Situational

Holbrook (1996)

Woodruff (1997)

Trade-off between what is received (benefit) and what is given(sacrifice)

Zeithaml (1988)

Day (1990)

Monroe (1990)

Urbany and Bearden (1989)

Dodds et al. (1991)

Anderson, Jain, and Chintagupta (1993)

Gale (1994)

Cronin, Brady, Brand, Hightower, and Shemwell (1997)

Woodruff (1997)

Patterson and Spreng (1997)

Cognition

Zeithaml (1988)

Woodruff (1997)

Patterson and Spreng (1997)

Emotional/psychological/pleasure

Lichtenstein, Netemeyer, and Burton (1990)

Business markets

Anderson, Jain, and Chintagupta (1993)

Competition

Anderson, Jain, and Chintagupta (1993)

Gale (1994)

Ravald and Gronroos (1996)

Relationship marketing

Ravald and Gronroos (1996)

Butz and Goodstein (1996)

Sirdeshmukh, Singh, and Sabol, (2002)

Goals and purposes

Woodruff (1997)


Source: Adapted from Kainth, J.S., and Verma, H.V. 2011. “Consumer Perceived Value: Construct ­Apprehension and Its Evolution.” Journal of Advanced Social Research 1, no. 1, pp. 20–57.


Within the broad gamut researchers have worked on different dimensions of value along with their anchor as listed in Tables 3.3 and 3.4.


Table 3.3 Value dimensions

Year

Source

Dimensions

Explanation of dimension

1988

Zeithaml

1. Intrinsic attributes (benefits)

How the purchase makes you feel

2. Extrinsic attributes (benefits)

Reputation of the product or service

3. Perceived quality (benefits)

The utility derived from the expected performance of the product

4. Price (sacrifice)

It is the perceived sacrifice involved. It includes both monetary and nonmonetary considerations

1991

Sheth, Newman, and Gross

1. Functional value

The perceived utility acquired from an alternative’s capacity for functional, utilitarian, or physical performance. It is measured on a profile of choice attributes. Generally the prime driver. Assumes economic utility theory and rationality. It is derived from the characteristics and attributes of an alternative

2. Social value

The perceived utility acquired from an alternative’s association with one or more specific social groups (demographic, socioeconomic and cultural-ethnic). It is a major driving force in highly visible products because of the demonstration effect

3. Emotional value

The perceived utility acquired from an alternative’s capacity to arouse feelings or affective states. It is often associated with aesthetic alternatives

4. Epistemic value

The perceived utility acquired from an alternative’s capacity to arouse curiosity, provide novelty, and satisfy a desire for knowledge. It is generally associated with entirely new experiences

5. Conditional value

The perceived utility acquired from an alternative as the result of the specific situation or set of circumstances facing the choice maker

1991

Dodds, Monroe, and Grewal

1. Perceived acquisition value

Perceived acquisition value is the buyers’ net gain (or trade-off) from acquiring the product or service

1998

Grewal, Monroe, and
Krishnan

2. Perceived transaction value

Perceived transaction value is the perception of psychological satisfaction or pleasure obtained from taking advantage of the financial terms of the price deal

1994

Babin, Darden, and Griffin (PSV (Personal Shopping Value) scale assumes Consumption Values by Sheth,
Newman, and Gross(1991)

1. Hedonic value

It is a festive and joyous side of shopping. It is more subjective and personal. It reflects shopping’s potential entertainment and emotional worth. It helps in explaining: impulsive purchases (results from the need to purchase than a need for a product) and compulsive purchases (where shoppers gain intrinsic value from the act of purchasing itself)

2. Utilitarian value

It results from some type of conscious pursuit of an intended consequence. It is considered task related and rational. It reflects shopping with a work mentality

1995

Naumann

1. Place

Concerned with attributes like location, layout, design and parking facilities, and so on

2. Product

Concerned with attributes of quality, branding and all

3. Service

Concerned with attributes like accessibility, check out facility, and so on

4. People

Concerned with attributes like knowledge, courtesy and staffing, and so on

5. Communication

Concerned with attributes like

6. Image

It is about reputation of the supplier

7. Price

Actual price against which the customer compares the performance to form value perceptions

1995

Groth

1. Cognitive: perceived utility

It refers to the utility derived from the functional aspect of the product or service

2. Psychological

The utility derived from the feelings or affective states that a product/service generates

3. Internal

Internal values, such as self-fulfillment and self-respect imply that the individual believes that he or she can control value fulfillment

4. External

External values, such as being well-respected and sense of belonging emphasize fulfillment beyond the control of the individual

1996

Holbrook

1. Extrinsic/utilitarian

Consumption is appreciated for its function and utility

2. Intrinsic/hedonic

Consumption experience is treated as an end in itself

3. Self-oriented

Consumer appreciates a product/experience for his own sake, for how he reacts to it and the effect it has on him

4. Other oriented

Consumer looks beyond self to others such as family, friends and country, and so on

5. Active

Involves any physical or mental manipulation of intangible or tangible object by an Individual

6. Passive

Results from responding to objects. It arises from things done to an individual

1996

Kantamneni and Coulson

1. Societal value

It is clearly representative of societal value: accrued when the product is useful, ethically produced and benefits the society

2. Experiential value

It shows the senses: if the product smells, feels, looks and sounds good, then the product has more value

3. Functional value

It is purely functional value in the sense that products should be reliable, safe and functional, that is, provide the core benefit for which it is bought

4. Market value

It is indicative of market value: a high priced product, with a good brand name and bought in a good or upscale store will have more value

1997

Gronroos

1. Cognitive

It refers to the utility derived from the functional aspect of the product or service

2. Emotional (psychological)

The utility derived from the feelings or affective states that a product/service generates

1997

De Ruyter, Wetzels, Lemmink, and Mattson

1. Emotional dimension or intrinsic value

Intrinsic value represents the affective appreciation of the process of a service episode, regardless of the actual outcome. It pertains to the emotional side of a service delivery process

2. Functional dimension or extrinsic value

Extrinsic value pertains to the utilitarian aspects of a service episode, that is, a service episode as a useful means to a certain end

3. Systematic value

Systemic value concerns the inherent relation between concepts in their systematic interaction, for example, the relationship between sacrifices and returns. It concentrates on rational or logical aspects of a service episode

1999

Sweeney, Soutar, and Johnson

1. Social value (acceptability)

The utility derived from the product’s ability to enhance self concepts

2. Emotional value

The utility derived from the feelings or affective states that a product generates

3. Functional value (price/value for money)

The utility derived from the product due to its perceived short term and longer-term costs

4. Functional value (performance/quality)

The utility derived from the perceived quality and expected perceived quality and expected performance of the product

5. Functional value (versatility)

The utility derived from the versatility and practicality of the product

2000

Hall et al.

1.Emotional/social value

Emotional value: The utility derived from the feelings or affective states that a product generates. Social value (acceptability): The utility derived from the product’s ability to enhance self concepts. Sweeney (1996) divided these two values; however, this study shows the two as so closely intertwined that they should be considered as one

2. Perceived risk

A factor, which is not addressed by Sweeney (1996), is perceived risk; this study shows that for intangible products, factors reducing risk are highly sought

3. Functional price

The utility derived from the product due to its perceived short term and longer-term costs

4. Functional Quality

The utility derived from the perceived quality and expected perceived quality and expected performance of the product

2000

Williams, Soutar

1. Functional value

Perceived utility acquired from an alternative’s capacity for functional, utilitarian or physical performance, (Sheth, Newman, and Gross 1991a, p. 160); prominent in pre- consumption stage

2.Emotional value

The ability of the product or service to arouse feelings or affective states (Sheth, Newman, and Gross 1991). Prominent in post-consumption stage

3.Social value

Perceived utility acquired from an alternative’s association with one or more specific social groups, (Sheth, Newman, and Gross 1991a, p. 161)

4. Epistemic value

The perceived utility acquired when the product arouses curiosity, provides novelty, and satisfies a desire for knowledge (Sheth, Newman, and Gross 1991a, p. 162)

2000

Parasuraman and Grewal

1. Acquisition value

It emphasizes the net gains associated with the benefits and the money given for acquiring and using a product or service

2. Transaction value

Refers to the psychological satisfaction or pleasure obtained by purchasing the product at a good price compared to customer’s internal reference price

3. In-use value

It means utility derived from using the product or service

4. Redemption value

It relates to benefits of service termination

2001

Sweeney and Soutar PERVAL

1. Emotional

The utility derived from the feelings or affective states that a product generates

2. Social

The utility derived from the product’s ability to enhance social self-concept

3. Quality/performance

The utility derived from the perceived quality and expected performance of the product

4. Price/value

The utility derived from the product due to the reduction of its perceived short term and longer-term costs

2002

Petrick SERVPERV AL

1. Quality

Consumer’s judgment about a product or service’s overall excellence or superiority (Zeithaml 1988)

2. Emotional response

Descriptive judgment regarding the pleasure that a product or service gives the purchaser (Sweeney et al. 1998)

3. Monetary price

Price of a service as encoded by the consumer (Jacoby and Olson 1977)

4. Behavioral price

Price (nonmonetary) of obtaining a service, which included the time and effort, used to search for the service (Zeithaml 1988)

5. Reputation

Prestige or status of a product or service, as perceived by the purchaser, based on the image of the supplier (Dodds et al. 1991)

2003

Woodall

1. Net Value for Customer (VC)

The balance of benefits and sacrifices: (the customer makes some judgment on the “worth whileness” of a product/service by computing or comparing weights and “quantities” of benefits and sacrifices

2. Marketing VC

The perceived product attributes: (VC conceived as “product attributes”)

3. Derived VC

Use/experience outcomes: (VC here is conceptualized as the benefits derived from consumption-related experience and are presented as independent of any sense of associated sacrifice)

4.Sale VC

Option determined primarily on price: (VC conceived as a reduction in sacrifice, or low price)

5.Rational VC

Difference between the estimated and the objective price: (Dependent upon the perceived benefits or attributes of the product under consideration, the customer calculates what a “fair” price might be in relation to the benchmark(s) already established. VC in this context is the difference between the two, stated in a relevant currency)

2003

Minna Pura

1. Functional value

Functional value is related to either monetary benefits or convenience and the mobile service is either perceived better than alternative services or it increases freedom from technology

2. Social value

Refer to hedonic aspects of consumption (e.g., enjoyment and other feelings), that is, mobile services can be used for fun. Social value is derived through reputation

3. Emotional value

Refer to hedonic aspects of consumption (e.g., enjoyment and other feelings), that is, mobile services can be used for fun. Emotional value is gained by emotion-laden communication (positive or negative)

4. Conditional value

Conditional value is a parallel category to other value categories that may increase or decrease the value perceptions

2004

Heinoen

1. Technical value

It denotes the characteristics of the core service and the service provider. Subdimensions—service characteristics; price; tangibles and image

2. Functional value

Relates to an evaluation of functional aspects of the service delivery process. It denotes how the service interaction process occurs, that is, the “how” component. It involves the input and output of the service process. Subdimensions—Customer input; impact; process and company input

3. Temporal value

Is based on temporal aspects affecting value perceptions. It represents how the customer perceives the temporal flexibility relating to when the service interaction occurs. It shows the “when” component, that is, ability to choose the time of the service delivery. Sub dimensions—time use and temporal latitude

4. Spatial value

Is spatially driven and related to the usage location. It denotes how the customer perceives the spatial flexibility relating to where the service interaction occurs. It denotes the “where” component, that is, ability to choose the location of the service delivery. Subdimensions—spatial latitude; space; appearance; spatial inconvenience


Source: Adapted from Kainth, J.S., and Verma, H.V. 2011. “Consumer perceived value: Construct ­apprehension and its evolution.”Journal of Advanced Social Research 1, no.1, pp. 20–57.


Most of the dimensions studied are classified either on the benefits side or sacrifices side. It is important to note that these studies have not taken the environmental setting into account. Except for some isolated studies there has been no integration of BOP perceived value in literature although it is such an important segment.


Table 3.4 Similarity in value dimensions

Type

Similar dimensions (source/year)

Type

Similar dimensions (source/year)

Benefits

Quality (Petrick 2002)

Sacrifices

Monetary price (Petrick 2002)

Quality/performance (Sweeney and Soutar 2001)

Price (Naumann 1995)

Functional value (Sheth, Newman, and Gross 1991)

Functional price (Hall et al. 2000)

Functional (William and Soutar 2000)

Perceived risk (Hall et al. 2000)

Product/service (Naumann 1995)

Behavioral (nonmonetary) price (Petrick 2002)

(Naumann 1995)

Functional (Minna Pura 2003)

Functional (Heinoen 2004)

Functional quality
(Hall et al. 2000)

Utilitarian (Babin, Darden, and Griffin1994)

Extrinsic (Holbrook 1996)

Emotional response
(Petrick 2002)

Emotional (Sweeney and Soutar 2001)

Emotional (Sheth,
Newman, and Gross 1991)

Emotional (William and Soutar 2000)

Emotional (Minna Pura 2003)

Emotional/social (Hall
et al. 2000)

Hedonic (Babin, Darden, and Griffin 1994)

Intrinsic (Holbrook 1996)

Price/value for money (Sweeney and Soutar 2001)

Reputation (Petrick 2002)

Image (Naumann 1995)

Social (Sweeney and Soutar 2001)

Social (William and Soutar 2000)

Social (Sheth, Newman, and Gross 1991)

Social (Minna Pura 2003)

Social/Emotional (Hall
et al. 2000)

Epistemic (William and Soutar 2000)

Epistemic (Sheth, Newman, and Gross 1991)

Conditional (Minna Pura 2003)

Conditional (Sheth,
Newman, and Gross 1991)

Communication (Naumann 1995)

People (Naumann 1995)

Place (Naumann 1995)

Spatial (Heinoen 2004)

Temporal (Heinoen 2004)


Source: Adapted from Kainth, J.S., and Verma, H.V. 2011. “Consumer Perceived Value: ConStruct ­Apprehension and its Evolution.” Journal of Advanced Social Research 1, no.1, pp. 20–57.


Measuring Customer Perceived Value

Till now we focused on the conceptualization customer perceived value as done in research. It is equally important to concentrate on the measurement aspect as well. Most of the researchers have taken the approach as outlined by Sheth et al. 1991 for their study. For operationalizing the theory various researchers have developed a questionnaire as a standardized procedure in a given research premise. The procedure for generating the question has begun with preliminary investigation of the construct in a small group of consumer sampled from the target population. Using a qualitative tool such as focus group interviews were conducted with sample respondents in two to five rounds along a preset list of questions. The responses of first round were content analyzed and mapped to items in the standard questionnaire to be administered to a larger representative pool of sample respondents. Responses that raise items most engendered into agreement discussion and enthusiasm were used. The choice of sampling technique and tool to collect data is within the discretion of researchers based on the research premise, design, and methodology. Full range of data collection methods are available to researcher, mail survey, telephone interview, and personal interview which could be self administered or interviewer administered. Different statistical analysis procedure such as factor analysis, discriminant analysis, and so on have been used for analysis of data.

Except for a few studies that have tried to develop a scale/index for measuring perceived value, studies have largely operationalized the construct through a generated instrument. The PERVAL and SERVPERVAL scale are the two scales worth mentioning at this stage.

PERVAL

The PERVAL scale was developed by Sweeney and Soutar 2001. It originally consisted of 19 items with a shorter scale developed in 2014 by Walsh et al. the preceding section has elaborated the different directions taken by academic research on value. Keeping the conceptual background on Sheth et al. work on consumption values the scale has considered both the utilitarian and experiential aspect of value. Unlike other previous studies this study is focused on measuring customer perceptions of value of consumer durable goods prior and soon after the purchase as an aid to understand consumer’s decision processes and choice behavior. Sheth et al. had argued that consumption value dimensions are independent. They relate additively and their contribution to customer choice is incremental. However, Sweeney and Soutar considered the interrelationship of hedonic and utilitarian characteristics and proposed that value dimensions may not be independent and incremental. Thus their study allowed the value dimensions to be interrelated. The author has also distinctly differentiated between the two constructs of Perceived Value and Satisfaction. Perceived value occurs at various stages of the purchase process whereas Satisfaction has been agreed upon as essentially a post purchase construct. Satisfaction has been found to be dependent on experience of having used the product or service. Value perceptions may occur at any of the stages; purchase, pre- purchase or post-purchase and be varied across stages. Satisfaction has been conceptualized as a summary variable unidimensional in nature moving on the hedonic continuum of unfavorable to favorable. Perceived value has been conceptualized as a multidimensional construct for scale development. The authors separated quality from the price attributes related to the product’s functional value of reliability and durability. These were taken together with price by Sheth et al. in their study under functional value. The purpose of the authors was to develop a useful, parsimonious, and practical scale that could be applied to a variety of purchase situations. The rigorous process followed by the authors was based on Churchill (1979) approach for developing measures of multiple item marketing constructs. Two purification stages, one with student sample and another with a more diverse set of customers were done after the development of an initial set of items. The resultant scale was a psychometrically and theoretically validated stable scale. Interested readers may access the details of scale development in the article, the study was done in several rounds in the context of a consumer durable product at brand level in Australia for a population of working and retired people aged 25–59 years.

The following items were considered in the scale.

Factor 1: Quality

  1. Has consistent quality
  2. Is well made
  3. Has an acceptable standard of quality
  4. Has poor workmanship
  5. Would not last a long time
  6. Would perform consistently

    Factor 2: Emotional

  7. Is one that I would enjoy
  8. Would make me want to use it
  9. Is one that I would feel relaxed about using
  10. Would make me feel good
  11. Would give me pleasure
  12. Is reasonably priced
  13. Offers value for money
  14. Is a good product for the price
  15. Would be economical

    Factor 4: Social

  16. Would help me to feel acceptable
  17. Would improve the way I am perceived
  18. Would make a good impression on other people
  19. Would give its owner social approval

The scale clearly highlights that consumers assess products both in functional terms of expected performance, versatility, and value for money and in terms of enjoyment or pleasure received from the product along with the social consequences. The authors recommend that retail marketers must be able to develop more sophisticated positioning strategies by understanding the importance of the different dimensions of value. The limitations of the scale are its generalizability to different contexts beyond the particular product/brand contexts in consumer durable goods and regions. The scale has not considered epistemic and conditional value as in model developed by Sheth et al.

With so much literature review it is worthwhile to note there has been no study that would conceptualize customer perceived value in the BOP context, neither has been one in the Indian context.
To summarize:

  1. The goal of marketing is to deliver value
  2. Marketing needs to be all inclusive in nature
  3. Qualitative Research findings
  4. Gap in the literature on family decision making
  5. Gap in the literature on customer perceived value

All the five are important from the BOP perspective and there is an academic and practitioner gap.

For the Indian urban BOP in all roles family is an important dimension as emerging from qualitative study. The Marketing 4 A framework is an inclusive framework but has to adapt the family dimension to serve the BOP.

Market researchers observed that the measurement instruments such as PERVAL which were available for the measurement of the tangible products do not capture value of a service (Jayanti and Ghosh 1996; Petrick 1999). There has been a lot of debate on tangible vs. intangible products such as services. The service dominant logic ends the debate and the book has taken that rationale. The context howsoever is important and with the logic the SERV PERVAL scale that has been developed for services by Petrick et al. 2002 is described here. Unlike the
PERVAL scale which considers pre-purchase, purchase and post-purchase stages the SERV PERVAL instrument considers post-purchase stage and repurchase intention. The basic conceptual model of the instrument takes on one of the roles of perceived value in the assessment of the service. It suggests that perceived service ­quality led to purchase of the service and its subsequent experience (Figure 3.8). The perceived value is formed out of the experience starting point of which is service quality. Service quality is a multi-attribute construct defined by five dimensions:

  • Reliability
  • Tangibles
  • Responsiveness
  • Assurance
  • Empathy

The customer has expectations on each of the quality attribute and is satisfied if these are met for a specific product in a given context. The perceived value would influence the purchase intention to reinvest in the service experience. It also impacts how positively or negatively the individuals talk to each other about their consumption/service experience. This process would have an effect on the individual’s future service quality assessment. The SERV PERVAL scale would only measure perceived value after a purchase and its impact on consumer decision making for future intentions.

Figure 3.8 Framework for SERV PERVAL scale

Source: Petrick, J.F. 2002. “Development of a Multi‐Dimensional Scale for Measuring the
Perceived Value of a Service.” Journal of Leisure Research 34, no. 2, pp. 119–34.


The instrument developed through a rigorous procedure identified five values in the pure services context measured through 25 items, mentioned as below:

Factor 1: Quality

  1. Is outstanding quality
  2. Is very reliable
  3. Is very dependable
  4. Is very consistent

    Factor 2: Emotional Response

  5. Makes me feel good
  6. Gives me pleasure
  7. Gives a sense of Joy
  8. Makes me feel delighted
  9. Gives me happiness

    Factor 3: Monetary Price

  10. Is a good buy
  11. Is worth the money
  12. Is fairly priced
  13. Is reasonably priced
  14. Is economical
  15. Appears to be a good bargain

    Factor 4: Monetary Price

  16. Is easy to buy
  17. Required little energy to purchase
  18. Is easy to shop for
  19. Required little effort to buy
  20. Is easily bought

    Factor 5: Reputation

  21. Has good reputation
  22. Is well respected
  23. Is well thought of
  24. Has status
  25. Is reputable

The authors have mentioned the following limitations in their research;

  • Context is very specific, only one sector (tourism and service), needs to move beyond that
  • The authors have suggested to explore the interrelationship between factors to refine the perceived value construct.

There is a need to conceptualize customer perceived value in the BOP context across different economies and develop a measurement instrument.

With all the discussion to establish the importance of perceived value, its relevance to firms and context, a marketing framework identified that should facilitate exchange of value between the firm and the customer to meet the objectives at both end, a few cases on each of the four value dimensions are presented where firm have been successful, even if they have not consciously adopted the 4 A framework in the Indian BOP context. After this is done Chapter 4 would then detail how the firms need to then start building on customer engagement for the long term in the urban BOP context.

For achieving marketing outcomes at the BOP, marketers would have to craft effective marketing strategies that give perceived value to the customers. As already detailed in Chapters 2 and 3 customers play multiple roles for a product purchase decision. It has been evident through primary research that perceived value across stages of purchase decision (pre, during, and post) consider the family as an anchor and not individuals in the emerging market such as India especially in the BOP context that was studied. The four key values which the marketers deliver as per the framework outlined earlier are: Awareness, Acceptability, Affordability, and Accessibility. In their respective roles of seeker, payer, user, and influencer customer looks through the family lens to capture each of the four values. This is an important part because if this is missed then the entire effort of the company may be futile. This section would elaborate successful marketing cases at the BOP emphasizing how company delivered perceived value to the customer through the 4As including the family dimension.

Awareness-

Kankhazura Tesan

Before customer can purchase a product they must know about the product and be aware of the brand and its positioning. But this is not sufficient for a customer to make a purchase. Effective advertising should kick-start a process where customer’s latent need is hit and he can be stepwise directed toward a purchase. It is important here to understand the role of media vehicles in this process. The advertising and other marketing communication tools utilize a whole set of media vehicles such as television, radio, Internet, bill boards, hoardings, and so on. The media vehicles may differ for different income segments based on income and regions. Such segments may show different consumer behaviors as well. Marketing companies targeting the BOP segment would have to identify the media behaviors and devise their marketing communication accordingly to reach these customers.

Hindustan Unilever Ltd is one of the India’s largest fast moving consumer goods company operating in more than 20 categories and over eight decades of experience in India. The company in order to reach low income customers in central India devised a unique strategy. The states of Bihar and Uttar Pradesh are media dark states because of low reach of television and radio coupled with huge power cuts but these states are also the most populated ones with a large BOP segment. Advertising has been important for FMCG companies but it was a big challenge to reach out to this big population segment. However, mobile penetration was almost 40 percent in these areas growing at the rate of 20 percent in 2012. The effective reach of this medium was more than the reach of television and radio the more popular vehicles for HUL’s other segments. HUL also had a consumer insight that these low income customers used their mobile calls not for making calls but also for entertainment (radio and stored music content).

Many customers in India had a habit of placing a call on their mobiles and hanging up before the call could be picked up. Their missed call would be returned by the receiver on seeing the number and if he felt the call was worth it. Friends and families would place missed call to save money. HUL decided to convert this frugal behavior with the entertainment consumption part to reach to this customer segment. It developed a missed call campaign strategy for its low cost detergent powder brand targeted at this segment. The brand message for Wheel, the detergent powder brand was around giving more washes at lower cost which met the need of this segment. Every wheel detergent powder packet carried the print, “Make a missed call and stay smiling.” On making a missed call at this number mobile users would receive a call back with Bollywood popular Hindi music along with a recorded dialogue from a new movie release of Salman Khan. Salman Khan had a huge mass appeal in this segment which followed his brand endorsement of Wheel. There were movie posters created by HUL for the missed call campaign on the mobile platform by HUL. This was done with the purpose of leveraging the consumer excitement around the new movie release. The content was unique, customized for regional preferences in the dialects of different locations. It was done based on the identification of caller’s telecom circle. Apart from the packets the toll free number was promoted through various channels in print and radio. Outbound calls and text messages were also sent to the target customer group. Most of the target customers used prepaid mobile phones and were used to the habit of missed call. The campaign received huge success with five million missed calls from 0.77 million unique users in three months after the launch. There was huge brand engagement achieved with six missed calls per number and 80 percent of customers listening to full ad content. Per contact cost was US $0.04, lower than any other mass media and engagement of 150 seconds per caller, much higher than any other media mode. Based on the success of this activation led to launch of HUL Kankhazura Tesan (KKT) in 2014. KKT was India’s first on demand entertainment mobile radio station. The customer gave a missed call to the 1,800 uniques 11 digit number. They received a call within 15 minutes that would feed the caller with free radio offering music, news, jokes and latest Bollywood news. It was interspersed with radio advertisement’s of HUL’s mass consumer brands. Thus KKT was an immediate success with reaching eight million people in Bihar in first six months. Through this medium HUL could directly engage with the customers for its brand circumventing the challenge of low penetration of other media platforms, power supply and other cultural issues.

Acceptability

Chik Shampoo

Market success can be assured when organizations are sound with the essentials. One such essential element as per the 4 A framework is acceptability. For an offering to be really accepted by the customer the offering has to offer much more than the core solution. Needless to mention that the offering would have to meet and exceed both the customer needs and expectations. As already mentioned acceptability would take two dimensions: functional and psychological. The functional one concentrates on the products whereas the psychological one concentrates on the customer experience. Companies will have to work on both of these. One such interesting example is of Chik Shampoo. Chik Shampoo has been considered as the pioneer of the sachet revolution in India. Started by C.K. Ranganathan, Chairman and Managing Director of CavinKare an INR 1,450 crore company. “Ranganathan’s father Chinni Krishnan was a school teacher and used to say: whatever I make must be affordable for the poor man.” Whatever the rich man enjoys the poor man should also be able to afford. Basically a school teacher who had shifted to family pharma business had failed in the initial efforts of packaging talcum powder and Epsom salt in sachets. The seed of sachet revolution were still sown. Many low income customers who could not afford a shampoo bottle but wanted to clean their hair by the convenient shampoo had an immediate requirement. Washing hair with shampoo was a new trend catching on in India. People in cities had started using shampoos but the low income customers still had to make the switch. Thus to help them try the shampoo, sachet was introduced. Ranganathan purchased a shampoo packaging machine with an initial investment of Rs. 15,000 and launched Chik shampoo after his father Chinni Krishnan. There were a lot of hurdles initially but in the first month itself he was able to make profits and sold 20,000 sachets. The shampoo sachets were not direct competition to the FMCG giants such as Unilever which were the leaders in the category with the products available mostly through stores. Chik was made available through roadside stalls and grocery outlets not targeted in the urban centers but countryside towns and villages. Ranganathan had got both the packaging and pricing right which made the product acceptable to the customers. He started with Tamil Nadu but slowly was accepted pan India. The product was taken well in terms of size that made it suitable and trial able for the entire family. For a family of five washing hair once a week the cost came less than Rs. 20 per month as the product then was used only by females. Like the high income groups shampoo offered them an easy and convenient way of washing hair while including them in the category. This was a departure for the BOP segment from the traditional methods of hair wash. Rangathan engaged them through a lot of BTL marketing communications event. This made them aware about the product. CavinKare care then launched talcum powder, hair oil, and so on, also in sachets infusing beauty consciousness in the low income customers along with a solution. The shampoo sachet costs were further lowered to 50 paise as cost was one of the company’s strengths. Competition entered almost ten years later by when the company had gained a strong ground and got time for establishing systems and practices. The growth of CavinKare has been gradual and focused. By selling shampoo at 50 paise per sachet the company had actually hit gold at the bottom of the pyramid. The company was very good in managing costs through IT solutions and never a compromise on quality was done.

Affordability

Coca Cola India

In 2002–2003 Coca Cola India slashed the prices for its carbonated soft drink brands such as Coke, Thumsup, Limca, Sprite, and Fanta. The vision was to lead the beverage revolution in India and maximize the company’s presence in the non-alcoholic carbonated beverages category. The 200 ml and 300 ml packs comprised 70 percent of the consumption basket of Mumbai, the city of launch. The prices were slashed to INR 5 and INR 8 for 200 ml and 300 ml bottles respectively. The company had the insight that per capita consumption of soft drinks in India was very low even in the developing economies. There was a huge untapped market opportunity but affordability was an important concern. Affordability would mean both financial and psychological affordability. Psychologically the target customer in the low income consumer segment was willing to purchase but financial affordability was a problem. The company encouraged financial affordability through the rate cut. The then Regional Operations Director for Coca Cola said,

this is in keeping with our policy to enhance the affordability factor and increase availability of our products. The lower prices provided an opportunity to a larger section of consumers to experience our world class products on a regular basis.

The market had untapped potential and growth rate was higher than other segments. The company had already achieved some success with the launch of 200 ml bottles. Coca Cola at that time had 58 percent market share in India. In 2004 because of huge distribution and logistics costs the company had to increase the price of 200 ml and 300 ml bottles to INR 7 and 8, respectively. The expense did not affect the family and was easily accommodated in the budget.

Accessibility

Avon Cosmetics, Brazil

Avon entered South Africa in 1990s at that time the country was rife with aspirant entrepreneurs. The reason for this was that huge formal job creation did not meet the rising levels of labor participation. Informal employment accounted for the bulk of the job creation (Dorris and Thurlow 2009). The informality was highly gendered with women being more self-employed. They were largely engaged with informal business that focused on hawking agricultural produce or traditional handicrafts. This is a very common scenario in India as well. Also, it was largely black women in South Africa that was engaged in informal economic businesses. There were several financial, educational, infrastructural, sociocultural and gender based conditions that kept these women confined to marginally profitable forms of organized trade. Avon saw a unique market opportunity that would take its products to the BOP market spread over a wide and tough terrain while making the women engage as entrepreneurs in its direct sales program. The cost of entry was low and so was the risk of participation in the Avon programme. Today, Avon is one of the largest companies in Brazil and leverages 800,000 “Avon ladies” as distributors to reach the remotest areas and jungles of Amazonia. The Avon system targets women as beneficiaries both in the roles of customers and as sales persons/agents. There was a firm realization in the company that investing in women was the most effective way to improve household, social, and financial health of nations. Most of the FMCG goods were purchased and used by women and they played an important role in these decisions. Access of such products and upscale brands was limited in these regions. At the time of joining Avon gave credit to the participating women. The company would fill orders as they come and did not charge any interest on the credit. Most women began by completing small orders such as a tube of moisturizer, a can of body spray, and so on, they then convert the profit from the small scale into subsequently larger orders. The representative received a commission of 20 percent on the retail price on a sliding scale based on the volume of goods sold. The success of the model was on the insight that women need these products to look and feel beautiful and the kind of access that the women distributors and customers received. Women had the need for these products even in the remotes areas which people could not travel or reach to. The participating women were also responsible for recruitment and administration of other women which would in return make them earn a commission as well. Thus we see how accessibility to the entire household and community was sought by the company through the enterprising women in Brazil.

Conclusion

It is important to run a concept through an implementation framework. The framework should be appropriate and robust to fit in a context. The 4As framework fits well and is robust enough because of its measurement framework. This has been elaborated through the applications of the framework in the chapter.