Understanding Buyers Value - Essay Example

Understanding Buyers Value Michael Porter (1991. pp103) presented an internal value chain of an organization from conceptualization to delivery of products to customers and argued that "Buyer Value is created when a firm lowers its buyer's cost or enhances buyer's performance". From the author's perspective, the buyer's value is the positive perception of the buyer herself/himself that the organization has earned amidst many factors that influence the perception. The factors may be behaviour with the buyer, communications carried out with the buyer, clarity & transparency of information provided to the buyer, understanding of buyer's need, personalization of the solution against buyer's needs, discount levels provided to the buyer, value added services provided to the buyer.

and after sales services & product upgradation services provided to the buyer whenever requested. It may be possible that the buyer has carried out competitive pricing analysis before the bargaining and hence the seller has to either justify higher price by demonstrating tangible value additions or simply quote lower than competition to sell the products. Hence, Porter's argument about lowering of buyer's cost and enhancing buyer's performance again gets applicable if the buyer appreciates these facts from her/his perspective.

The firm’s perspective can at the most be to control the factors (value chain management) that can achieve the positive perceptions of the buyer – what the buyer finally perceives is the actual value achieved by the firm. The author strongly agrees about the theory of reduced sacrifice undertaken by the buyer because it strongly influences the perception of the buyer regarding the firm.Discussion PointsElmaghraby and Keskinocak (2003. pp1288-1289) presented the mechanism of dynamic pricing to get the best benefits out of increased customer demands and reduced inventories.

In such cases, the firms tend to increase their prices which definitely tend to increase the sacrifice level of customers to acquire the prices. The author wishes to discuss if such dynamic pricing strategies in the attempt to get the best out of "favorable conditions for the firm" cause long term damage to the value perceptions of the customers which may backfire especially when the demands eases. Slater and Narver (1998. pp1000-1005) presented that long term competitive advantages of companies can be improved by carrying out innovations more towards market orientation than customer orientation.

This is primarily because customers are grossly ignorant about their needs. But on the contrary it is true that customers perceive value on their own based on their social influences and past experiences. The author wishes to discuss how companies should be able to control the perceptions of customers to achieve positive buyer value if this theory about market orientation should be trusted Conclusion:The author presented own perspective about buyer's value stating that this largely depends upon the factors that drive positive perceptions in customer's mind.

The best that an organization can do is to apply effective efforts to achieve this positive perceptio