To increase value, marketers may __, decrease price, or do both.
Multiple Choice
decrease promotion
increase benefits
decrease distribution
increase advertising
allow the perceived value of the item to increase as it matures in the life cycle
The correct answer and explanation is:
Correct Answer: Increase benefits
Explanation:
Value, from a marketing perspective, is the relationship between the benefits a customer receives from a product or service and the price they pay for it. Marketers can influence this value by either increasing the benefits offered, decreasing the price, or doing both. Let’s examine why increasing benefits is a valid answer:
- What are benefits in marketing?
Benefits refer to the tangible and intangible advantages a customer receives when purchasing a product or service. These may include quality, features, brand reputation, customer service, or added perks like warranties or discounts. When marketers increase these benefits, they enhance the overall value perception of the product or service. - The value equation:
Value can be simplified as: Value=BenefitsPrice\text{Value} = \frac{\text{Benefits}}{\text{Price}} Increasing benefits while keeping the price constant results in a higher perceived value. For example, a smartphone company might introduce new features, improve performance, or provide extended customer support to make their product more appealing. - Competitive advantage:
By increasing benefits, companies can differentiate their offerings from competitors. This strategy is often more sustainable than simply lowering prices, which may lead to price wars and reduced profit margins. Instead, offering more benefits aligns with long-term brand building and customer loyalty. - Consumer perception:
Consumers tend to associate higher benefits with premium value, which can justify the price even when competitors offer lower-cost alternatives. This approach caters to customers who prioritize quality, convenience, or superior experiences over price alone.
In conclusion, marketers increase benefits to add value because it not only attracts more customers but also enhances brand equity and creates a loyal customer base. While price adjustments might provide short-term gains, improving benefits fosters sustainable competitive advantage and long-term success.