Value or the worth of something is customer-centric. The customer always decides what is of value to them. Value is determined by the customer's specific tastes, preferences, wants, and needs. I mentioned earlier that we should not confuse value with price: Price is only one component of value. People base their purchasing decisions on their specific situation and desires.
Customers who are buying the identical product may be buying it for different reasons. For example, three shoppers buy the same type of insurance policy from the same company and the same insurance agent. Kevin is 30 years old and his wife is pregnant with their first child. In order to protect his family in the event of his death, he applies for and purchases a $250,000 life insurance policy. He believes the monthly premium is a worthwhile expense for the comfort he receives knowing his family will be able to continue their standard of living. The policy has value to Kevin.
Bob and Joe are partners in a heating and air conditioning company. They owe $250,000 on a building their business occupies. If either of them could not work at the business every day, there would not be enough money to make the mortgage payment. Their attorney suggests that each of them applies for and purchases a $250,000 life insurance policy. In the event that either partner dies before the building is paid off, the remaining partner will have the money to retire the mortgage. Bob and Joe believe the premium they pay is a good value.
Jack is a big basketball fan of his college alma mater. The team has done so well in recent years that tickets to their home games are no longer available. Jack's alumni association offers season tickets to alumni members who will become life members of the association. Life membership to the association requires members to purchase a $250,000 life insurance policy naming the association as beneficiary. Jack applies for and purchases the insurance in order to qualify for season tickets. He believes the premium he pays for the insurance is a good value in exchange for his basketball tickets.
These insurance buyers are finding value in the same product in different ways. Kevin finds value because of the love he has for his family and knowing they will be able to continue their standard of living. Bob and Joe find value for business reasons. Jack finds value because he is trading the cost of insurance for a seat at the basketball games next season.
Even though it is the same product, each customer is applying his or her own definition of value. If you know how to listen carefully, customers are always willing to tell you what they value.