ABSTRACT
Customer value mapping (CVM) emerged from the total quality management movement, in which firms endeavored to measure and deliver superior functional performance more cost-effectively. The basic assumption underlying CVM is that customers evaluate products and services relative to each other by comparing their price to performance ratios. A product with a lower price performance ratio, CVM proponents claim, will win market share from competitors as customers discover that it represents a better value. CVM logic would suggest therefore that the semi-conductor manufacturer could set a price 17% higher than competitors’ prices for a comparable semi-conductor. The problem with CVM is that it confuses different concepts of value, which need to be clearly understood when communicating price and value to customers. A product’s objective monetary worth to a customer, adjusted for the availability of competitive substitute products, is known as economic value or value in exchange.
