Chapter 7 is about crafting a customer value proposition and positioning.

If we assume that most customers are value maximizers, they are likely to choose (within the bounds of their limited knowledge, income and search abilities) the offer they believe will deliver the highest value for them. You should answer the discussion questions below after you have read chapter 7.

Depending on the needs of customers, an offering can create value across three domains: functional, psychological, and monetary.

• Functional value reflects the benefits and costs that are directly related to an offering's performance.
• Psychological value encompasses the psychological benefits and costs associated with the offering. Psychological value extends beyond the functional benefits to create emotional benefits for target customers.
• Monetary value includes the financial benefits and costs associated with the offering.

For each company offer, there is a perceived bundle of functional, psychological, and monetary costs customers will incur in evaluating, obtaining, using, and disposing of the given market offering.

The customer value proposition is based on the difference between benefits the customer gets and the costs he or she assumes for different choices.

The marketer can increase the value of the offering by raising functional, psychological, and monetary benefits and/or reducing the corresponding costs.

1. Consider your university's positioning statement.

(a) How does your university describe its attributes and the benefits it provides to the buyer (in this case, you, the student)?

(b) How would you describe your university's competitive advantage? Support your answer. (If you think that it does not have a competitive advantage, explain why.)

2. Very often, managers conduct a customer value analysis to reveal the company's strengths and weaknesses relative to those of various competitors.

Choose two companies that you are familiar with, perhaps that you also like, for which you are able to express an opinion on the functional, psychological and monetary value of one of the products they offer. Try to select two companies that competitors and products/services that are substitutes for each other.

Explain which of the two companies offers a better value proposition. You must support your answer with reference to the functional (performance), psychological (emotional), and financial (cost) value perceived to be offered by each company and its product or service.

In answering the above questions, use specific examples and/or cite relevant articles to support your viewpoint.

Include a References list