The assessment of customer value
The value is not “what the damned fool will pay for it“.
In the model of the Ecocosts / Value Ratio (EVR), the value is the (estimated) market value, i.e. the fair price of the product. Note that the value is not ‘just a guess’ but is the optimum fair price in terms of profit: it needs a well balanced assessment of the profit margin per item, and the number of buyers you expect at that price level, see webpage value.
But what is the expected fair price of a product which is still in the design and development stage? In which niche market?
Different types of assessment
Since the value is determined by the customer (the ‘persona’ of the target market niche), the only way of assessment of future products is to ask the future (potential) customer. There are basically 4 methods, often applied as subsequent steps during the design and development process:
- (1) Just ask the fair price:
(the fair price is the price at which the customer would consider to buy the product).
This can be done at any place where interested consumers are expected, e.g. exhibitions, fairs, seminars, etc.
- (2) Ask the preference of a row of products with the same function (including the new product)
Provide the price of the products and ask the fair price of the new product.
Discuss the results with a consumer panel.
- (3) Ask a scores on quality and importance on a Likert scale
Ask a score (1 thru 5) of each quality aspect and ask also the score of its importance (1 tru 5). Use the quality dimensions of Garvin as a guideline, and discuss the results with a consumer panel.
- (4) Establish the position of the competitor(s)
Do point 3 also for the product of the competitor and make the analysis of Gale