Category: Business and Marketing
In studying for my marketing midterm, I've come across an extremely interesting way of thinking about a customer's needs and generally how they value certain products or services. The Mental Model is Mutually Exclusive and Collectively Exhaustive (meaning they cover all bases and do not overlap) and comprised of
a three-pronged Economic Value, Functional Value and Psychological Value.
Economic Value is a relative measuring stick that is reliant on the maximum price a customer is willing to pay, its product life cycle, and relation to existing or competitive products. The question it answers is
- Does it make sense to pay a certain amount for this product based on the following circumstances?
Functional Value
Functional Value is the utility the product provides to the customer. It's based on a combination of how important consumers view the product and how the perception
Example: Product too heavy, product is convenient.
Psychological Value
Psychological Value is the feelings and thoughts evoked in a certain product. Ex" World's fastest train! vs Plain Vanilla Airport Service" It appeals to different audiences.
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