Understanding Perceived Value in Marketing: Importance and Impact

Definition

Perceived value is the assessment made by customers regarding the worth of a product or service based on its ability to meet their needs and expectations, particularly compared to competing offerings.

What Is Perceived Value?

In marketing terminology, perceived value is customers’ evaluation of a product or service’s merits and its ability to meet their needs and expectations, especially compared with its peers. It plays a key role in pricing and consumer decision-making, as higher perceived value can justify higher prices.

Marketing professionals try to influence consumers’ perceived value of a product by highlighting attributes, such as quality, design, and convenience, that make it superior to the competition, along with the functional, emotional, and social utility it provides.

Key Takeaways

Perceived value reflects customers' opinions of a product's value compared to competitors.
It is influenced by marketing strategies that highlight a product's unique attributes.
Products may be priced based on emotional appeal rather than production cost.
High perceived value can allow brands to charge higher prices than generic equivalents.
Utility types, such as form and task utility, play a role in shaping perceived value.

The Significance of Perceived Value in Marketing

Perceived value comes down to the price that the public is willing to pay for a good or service. Even a snap decision made in a store aisle involves an analysis of a product’s ability to fulfill a need and provide satisfaction compared to other products under different brand names.

The work of the marketing professional is to enhance the perceived value of the brand they are selling.

The pricing of products takes perceived value into consideration. In some cases, the price of a product or service may have more to do with its emotional appeal than with the actual cost of production.

Important

Even a snap decision made in a store aisle involves an analysis of a product’s perceived ability to fulfill a need and provide satisfaction.

Exploring Different Types of Perceived Utility Value

Marketers who want to influence the perceived value of a product define its attributes in terms of its utility, or the extra benefits and values that the customer expects to get in using it. The perceived utility of many products and services may differ widely even among similar or virtually identical products.

There are five types of utilities that companies aim to create through marketing campaigns for products:

Form utility is the aesthetic appeal of the physical design of a product. Even a utilitarian product like a frying pan can increase in perceived value because of its appealing design.
Task utility is the value attached to a service that saves the customer time, effort, or money. Car detailing shops and laundry services offer utility value.
Time utility refers to the ease of access to a service or product, such as 24-hour service compared to 9-to-5 hours.
Place utility is the convenience of the location, like a fast-food outlet that’s around the corner compared to a restaurant that’s 20 miles away.
Possession utility refers to the ease of purchasing the product. A department store that features online ordering, home delivery, or in-store pickup is aiming for possession utility.

Unique Aspects and Considerations of Perceived Value

A brand sets expectations for its products and services. This can justify a higher price compared to generic equivalents. For example, Advil and Motrin both contain ibuprofen but cost more than generic versions.

Luxury goods take perceived value to the next level by adding prestige. Their value often comes from the prestige of owning and using them, not just from their utility. The perceived value of a Rolex watch is not based on its functionality but with its image as a mark of personal success and refined taste. Some brands market themselves as smart bargains. Their perceived value often lies in a lower price compared to competitors of equal quality.

What Does Perceived Value Boil Down to?

Perceived value comes down to the price that the public is willing to pay for a good or service.

How Do Marketers Define Perceived Value?

Marketers aiming to influence the perceived value of a product define its attributes in terms of its utility, or the extra benefits and values that the customer expects to get in using it.

Why Do Some Brands Charge More for the Same Product or Service?

A company’s well-established brand can command a higher price than its generic equivalents, because that brand is meant to communicate a set of expectations associated with its products or services.

The Bottom Line

In marketing parlance, perceived value is customers’ evaluation of the merits of a product or service and its ability to meet their needs and expectations, influencing the price they're willing to pay.

It reflects utilities like form, task, time, place, and possession, often elevating branded or luxury items for their prestige. Marketers enhance perceived value through branding, design, and convenience, making it essential for businesses to price effectively and for consumers to judge worth against alternatives.