The Daily Drucker, February 29 - Understanding What the Customer Buys

What does the customer consider value?

The final question needed in order to come to grips with business purpose and business mission is: "What is value to the customer?"  It may be the most important question.  Yet it is the one least often asked.  One reason is that managers are quite sure that they know the answer.  Value is what they, in their business, define as quality.  But this is almost the wrong definition.  The customer never a product.  By definition the customer buys the satisfaction of a want.  He buys value.

For the teenage girl, for instance, value in a shoe is high fashion.  It has to be "in."  Price is a secondary consideration and durability is not value at all.  For the same girl as a young mother, a few years later, high fashion becomes a restraint.  She will not buy some thing that is quite unfashionable.  But what she looks for is durability, price, comfort and fit, and so on.  The same shoe that represents the best buy for the teenager is a very poor value for her slightly older sister.  What a company's different customers consider value is so complicated that it can be answered only by the customers themselves.  Management should not even try to guess at the answer - it should always go to the customers in a systematic quest for them.

ACTION POINT: What do your customers consider most valuable about the product or service you provide?  If you don't know, find out.  If you do know, ask your customers if you are delivering.

Management: Tasks- Responsibilities-Practices

Quoted from the Daily Drucker, 29 February, pg 65