Consumer Values, Product Benefits and Customer Value: A Consumption BehaviorApproach

Albert Wenben Lai, University of Wisconsin-Madison

ABSTRACTFrom the perspective of consumption behavior analysis, this

paper constructe a framework of product valuation for consumersand ite typology of product benefite. Then, the paper presente acomprehensive model of customer value for the consumer marketintegrating consumer values, product benefits, logistic benefite,and various coste of consumption. Finally, the implications ofholistic consumption behavior analysis for marketing strategy arediscussed.

"Everything we do starts with knowing a client's businessinside out. That's the key to anticipating their needs, tosolving their problems, to bringing them opportunities theymight not find on their own." J. P. Morgan

INTRODUCTIONMost marketing strategists will agree that creating customer

value is fundamental to both profit-seeking companies and non-profit organizations. Indeed, creating superior customer value is anecessary condition fora company securinga niche in acompetitiveenvironment, not to mention a leadership position in the market(Day 1990). AccordingtoPorter (1980), a company can follow twogeneric routes to compete in a market: differentiation and low-cost.Day (1990) maintains that both approaches have the same objec-tive to create superior customer value, because "regardless ofwhich of these routes is emphasized, the effort will fail unlesssignificant customer value is created" (Day 1990, p. 163).

Day (1990) addresses the issues in analyzing customer valueand proposes that it can be expressed in a "value equation":"Customer's Perceived Benefits-Customer's PerceivedCosts=Perceived Customer Value" (p. 142). Although Day'sapproach to customer value is basically sound, some details regard-ing consumer customers remain unclear. For example, the processby which consumers perceive product benefits is nebulous: Dayparticularly addresses product valuation by industrial customers indetail, but this is only in principle a part of a much more complexprocess of product valuation by consumers. Hence a theoreticalframework which underlies the consumers' overall product valu-ation is still missing in the literature. Such a framework shouldaddress the issues of AOK consumers perceive the benefits and costsof producte, as well as what possible benefite and costs consumersmay perceive from producte in the market. The current paper triesto fill these gaps.

In addition, the word "value" has discrepant meanings in themarketing literature, especially between its two areas: marketingstrategy and consumer tiehavior. What marketing strategists meanby "customer value" is quite different from the meanings of the"consumer values" discussed in consumer behavior research(Clawson and Vinson 1978; Kahle 1977; Peter and Olson 1990;Sheth, Newman and Gross 1991; Vinson, Scott and Lamont 1977;Wilkie 1990). Generally speaking, "customer value" focuses on thebuyers' evaluation of product purchase at the time of buying, while"consumer values" stress people's valuation on the consumption orpossession of products. Actually, Day's approach to customervalue (Day 1990), by emphasizing the customers' perceptions,indicates a direction in which the two different, but related, con-cepteof"value(s)" in marketingdiscipline might be integrated. The

cunent paper helps accomplish this integration by suggesting amodel of customer value for consumer markets.

This paper first reviews the literature on consumption behav-ior analysis relevant to marketing strategy. Next, a framework ofproduct valuation for consumers and ite typology of product benefitare proposed based on the consumption behavior analysis. After theprocess of product valuation for consumers has been made clear, thepaper presents a comprehensive model of customer value for theconsumer market integrating consumer values, product benefite,logistic benefite, and various costs of consumption. In the proposedmodel, product benefits, logistic benefits, and costs are defined interms of consumers' perception in the activities of acquisition,consumption (or using) and maintenance, as well as consumers'expectation of personal values satisfaction before buying. Finally,the implications of consumption behavior analysis for marketingstrategy are discussed.

CONSUMPTION BEHAVIOR ANALYSIS ANDMARKETING STRATEGY

Many marketing researchers have maintained that detailedanalyses of consumption behavior are the fundamental basis forcreating superior customer value for consumers (Day 1990; Boydand Levy 1963; Treacy and Wiersema 1993; Normann and Ramirez1993). The importance of a comprehensive analysis of customers'consumption activities in planning effective marketing strategieswas first pointed out by Boyd and Levy (1963). They maintain thatmarketing strategies should be planned and implemented in termsof the customer's needs and behavior pattems. Also, the coreelement of an effective marketing plan is to think in terms of the"consumption system" in which the product plays a part. Boyd andLevy defined a consumption system as "the way a purchaser of aproduct performs the total task ... that he or she is trying toaccomplish when using the product not baking a cake, butpreparing a meal" (Boyd and Levy 1963, pp. 129-130).

Underlying this systematic view of consumption are at leasttwo concepts critical to customer value analysis. First, this system-atic view looks beyond the purchase behavior of buyers to the usebehavior of consumers: "Whatever reasons people have for buyinga particular product are rooted in how they use that product, and howwell it serves the use to which they put it" (Boyd and Levy 1963, p.130). Second, the systematic view emphasizes the dynamic inter-relations between the producte that comprise a consumption sys-tem: "The use behavior for a particular product is bound to beaffected not only by... the task to be performed with the use ofthatproduct but also by the related products and their use behaviors thatmake up the total consumption system" (Boyd and Levy 1963, p.130).

Based on their observation of the holistic nature of customerjudgment. Day et al. (1979) advocated the application of customer-oriented approaches to defining a product-market and then identi-fying its competitive structure. In particular. Day and his col-leagues endorsed a usage-situation approach to defining a product-market (or competitive) structure. The usage-situation approachemphasizes that the anticipated use, the functions to be served, andthe consumption context of a product ultimately influence consum-ers' choices among products/brands (Srivastava 1981). Althoughit takes a systematic view of consumption, the usage-situation

381 Advances in Consumer ResearchVolume 22, 1995

3S2/Consumer Values, Product Benefits and Customer Value: A Consumption Behavior ApproachFIGURE 1

A Framework of Product Valuation for Consumers

Cultnral Vaines

(e.g., self-fulfllment)

Generic Product Benefits(e.g.:1. functional 5. aesthetic2. social 6. hedonic3. affective 7. situational4. epistemic 8. holistic)

I^-oducts

(e.g., a house withmany attributes)

Personal Values

(e.g., self-fulfilment in aparticular environment)

Consumption Values

Consumption Schemata(e.g., ideas of owning andfurnishing an elegant house)

Perceived Product Benefits

(e.g., appreciation of specificattributes of the house)

Objective or commonly known states.Subjective cognition or perception.

approach stresses that the substitutability among products/brandsin the usage-situation determines market structures (i.e., the com-petitive providers) of the product-type in question (Srivastava,Alpert and Shocker 1984). While the usage-situation approach isbased on the holistic view of consumption behavior and is dubbedcustomer-oriented, it deals only with companies' need to definetheir product-market structures. It has nothing to do with theanalysis of customer value and how this value can be expanded. AsSolomon (1983) points out, conventional marketing research haspaid much more attention to the substitutability of products than totheir complementarity, and the usage-situation approach is noexception. In summary, the literature on consumption behavioranalysis can proceed further to conceptualize the aspects ofcomplementadty-in-use of products through which consumer mayderive product benefits holistically in the product complement.

CONSUMER'S PRODUCT VALUATION ANDTYPOLOGY OF PRODUCT BENEFITS

The questions of how and what consumers perceive fromproducts in the market request the process and stmcture by whichconsumers value the products. Based on consumption behavioranalysis, the current paper proposes a framework of product valu-ation for consumers and its typology of product beneflts(see Figure1). This model stresses that to investigate the consumer's productvaluation, it is necessary to integrate cultural values, personalvalues, consumption values, and product benefits (Clawson andVinson 1978).

Cultural ValuesCultural, social, and familial environments affect the forma-

tion and development of individual beliefs. In a socio-cultural

environment, a set of values usually represents widely sharedbeliefs about what is desirable. These socio-cultural beliefs arecalled cultural values or "society core values" (Engel, Blackwelland Miniard 1990) and are implanted into individuals "naturally"through socialization and education, perhaps with some modifica-tion as personality and attitude moderate the leaming process. Forexample. Kahle (1985) proposes a "List of Values" (LOV) genericto Americanculture in the 1980s, such as self-respect, security,self-fulfillment, fun and enjoyment in life, and warm relationships withothers. These cultural values are seen by some social thinkers as"objective"(Frondizi 1963). Thisnotionofbeingobjectiveimpliesthat they are commonly known to the members of a society.However, not all of the cultural values in a society will be adoptedunanimously by its members. Some cultural values might befollowed by only a small portion of the people, while other valuesmight be accepted widely. In sum, cultural values are genericbeliefs about what a society argues to be desirable and beneficial.These values are then freely adopted on an individual basis.

Personal ValuesPersonal values are the Individuals' beliefs about what are

desirable to themselves. They are self-centered; that is, personalvalues are closely linked to needs. Moreover, they are derived from,and modified through, personal, social, and cultural learning(Clawson and Vinson 1978). From a cognitive perspective, per-sonal values are the mental representations of underiying needsafter the modification, taking into account the realities ofthe woridand reflecting the individual's personality (Wilkie 1990). Forexample, the cultural value of "self-fulfillment" might be mani-fested quite differently in the minds of two individuals with differ-ent familial and persona! backgrounds.

According to Rokeach (1973), human values have two maintypes: terminal and instrumental. Terminal (or end-state) valuesare beliefs people have about the goals for which they strive (e.g.,self-fulfillment, or enjoyment in life). Instrumental (or means)values are beliefs about desirable ways to attain these terminalvalues (e.g., owning an elegant house, or taking a vacation).Therefore, personal values generally correspond to terminal values,while values of desirable activities (to be discussed next) arecomparable to instrumental values. Personal values are enduringbeliefs which guide various actions and judgments across specificsituations. Hence, personal values are more abstract and may begeneralizable easier than values of actions. In other words, theconcept of personal values is similar to the idea of "global values"(in the realm of a person's perception) proposed by Vinson et al.(1977); these are small in number (dozens) and considered to be athigh levels of conceptualization.

Consumption ValuesConsumption values refer to subjective beliefs about desirable

ways to attain personal values. People achieve personal values (orgoals) through actions or activities, such as social interaction,economic exchange, possession, and consumption (Sheth et al.1991). According to mcort-e/wcAommodesof consumer productknowledge (Peter and Olson 1990), people may have ideas andpreferences about various actions that can help them achievepersonal values. Therefore, relative to personal values, consump-tion values are instrumental in nature. For example, owning anelegant house and acquiring a prestigious car are for some peopledesirable ways of achieving self-fulfillment. Attending footballgames(especiallythoseoffavorite teams) and takinga vacation tripare favorable activities which lead to personal fun and enjoyment.Furthermore, individuals may hold severa! personal values bywhich they direct or evaluate consumption activities. Therefore,the consumption values of these types of activities (or possessions)are sophisticated and do not simply satisfy one single personal value(Shet et al. 1991).

As we can observe in ourselves or others, consumption activi-ties usually include an assortment of goods and services (Boyd andLevy 1963). For example, "owning an elegant house" requireshouse owners to acquire many goods and services in addition to thehouse itself, just as "taking a vacation trip" involves many otherrelated acquisitions. Moreover, in a product constellation for aconsumption activity, there may be some properties in common.McCracken (1988) observes that "the consumer goods in anycomplement are linked by some commonality or unity" (p. 119).From a social interaction perspective, Solomon (1983) maintainsthat consumers employ product constellations in "setting the stage"for the social roles they play. Product constellations occur, becauseindividuals use entire complements of products to achieve personalvalues. The products unified in a constellation all carry the sameinformation about individual values. Furthermore, Lai (1994)maintained that consumers may obtain satisfaction holisticallyfrom the related consumption activities and the constellation ofproducts in use.

Consumption SchemataCognitive psychologists maintain that people may acquire

knowledge structures to represent various consumption activitiesand product constellations (Abelson 1976; Cnxker 1984). Lai(1994) uses the term consumption schema to refer to the cognitivestructure which organizes and represents personal ideas and beliefsaboutthesubstanceofaconsumption activity, such asinterrelation-ships among complementary products, the cultural value and socialmeaningsof the commodities, and personal preferences and affec-

Advances in Consumer Research (Volume 22) 1383tive associations. Hence, a consumption schema represents aconsumer's basic thoughts about a consumption activity, thoughperipheral adjustments may be needed to accommodate the specificsituation in which the consumption takes place. In short, inconsumption, or possession of products, people may acquire per-sonal consumption schemata (or a particular planned pattern),including their anticipation of and requirements for a product (or acomplement of products), reflecting their consumption values ofthat consumption or possession.

Typology of Product BenefitsFrom the customers* perspective, products are viewed as a

bundle of benefits, not attributes (Day 1990; Peter and Olson 1990).In other words, "customers are less interested in the technicalfeatures of a product or service than in what benefits they get frombuying, using or consuming the product." (Hooley and Saunders1993, p. 17) In a competitive market, in addition to their basicbenefits, products usually have many other attributes, such asfeatures, styles, symbolism, durability, quality, and related ser-vices. By designing products with combinations of these attributes,marketers try to attract consumers with particular consumptionvalues.

A comprehensive understanding of possible benefits thatcustomers may seek in products is a fundamental basis for market-ers to formulate sound marketing strategies, especially productdifferentiation or positioning (Peter 1990; Boyd and Levy 1968).Sheth et al. (1991) categorize five product benefits which influencethe consumer's choice behavior: functional, social, emotional,epistemic and conditional. However, these benefits are onlygeneric; that is, they are general, potential, and not yet applied to aspecific consumption activity. Moreover, because Sheth et al.'sanalysis is not grounded in a holistic approach to consumptionbehavior analysis, Sheth and his colleagues conflate product ben-efits with consumption values; that is, they do not distinguish"generic product benefits" from "consumption values," as thecurrent paper does. Furthermore, their categorization ignoresotherimportant generic product benefits: e.g., hedonic benefits, aestheticbenefits, and holistic benefits.

Going beyond Sheth et al.'s original categorization of productbenefits (Sheth et al. dubbed them as "consumption values"), thecurrent paper proposes a typology of product benefits that a con-sumer may derive from possession or consumption. The typologyincludes eight generic product benefits: functional, social, affec-tive, epistemic, aesthetic, hedonic, situational, and holistic. Thedefinitions of these terms are discussed briefly in what follows:

(1) Functional benefit refers to a product's capacity for func-tional, utilitarian, or physical performance. Functional benefits arederived from the tangible and concrete attributes that a consumermay directly experience when using or consuming the product.

(2) Social benefits are the perceptual benefits acquired from aproduct's association with social class, social status, or a specificsocial group. Highly visible products (e.g., clothing, jewelry, andautomobiles) often carry social benefits.

(3) Affective benefit refers to the perceptual benefit acquiredfrom a product's capacity to arouse feelings or affective states.Affective benefits are often associated with cultural-ethnic mean-ings (e.g., Christmas trees. Thanksgiving turkeys) or personal,idiosyncratic meanings, tastes and memories (e.g., foods that arousefeelings of comfort through their association with childhood expe-riences, or cars with which consumers are said to have "loveaffairs").

(4) Epistemic benefit refers to the benefit acquired from aproduct'scapacity to satisfy curiosity, provide novelty, and/or meeta desire for knowledge. Exploratory, novelty-seeking, and variety-

384 / Consumer Values, Product Benefits and Customer Value: A Consumption Behavior Approachseeking consumption behaviors are examples of epistemic valuepureuit. Atso, a consumer's propensity to adopt new products isconsistent with epistemic benefit (Sheth et al. 1991).

(5) Aesthetic ben^t refers to the benefit acquired from aproduct's capacity to present a sense of beauty or to enhancepersonal expression. Aesthetic benefit usualty is subjective andidiosyncratic. Styte demands, product-appearance demands, artpurehases, and fashion-fottowing are examptes of consumers'pursuing aesthetic benefits.

(6) Hedonic benefit refers to the benefit acquired from aproduct's capacity to meet a need of enjoyment, fun, pleasure, ordistraction from work or anxiety. Otshavsky and Granbois (1979)ctaim that hedonic benefit is an important dimension of manyproducts. Peopte are not atways tooking for rationat or "serious"benefiU; they may want to retax or be distracted. Taking a vacationtrip, going to bars, watching sport, comic movies or TV programs,or even buying funny trinkets to make fun of friends are examptesof hedonic benefit pursuit.

(7) Situational benefit refers to the benefit acquired from aproduct's capacity to meet situationat needs in specific circum-stances. A product acquires situationat value in the presence ofantecedent physicat or sociat contingencies that enhance its func-tional, social, or other benefits. Situationat benefit is measured onthe profite ofa particutar consumption situation.

(8) Holistic benefit refers to the perceptual benefit acquiredfrom the complementarity, coherence, compatibility, and consis-tency in a product consteltation as a whote. Hotistic benefits arefrequentiy required and perceived in ctothes, furniture, and foodconsumption. Hotistic product benefit is a resutt of "synergy"derived from a product combination. Its implications for marketingstrategy wilt be discussed tater in detait.

Different types of product benefits may be corretated andcombined in particutar consumption activities, or there may betrading off between them. In addition, a product may offer multiplegeneric benefits. For example,

"to a first-time home buyer, the purchase of a home mightprovide functional [benefit] (the home contains more spacethan the present apartment), sociat [benefit] (friends are atsobuying homes), emotionat [benefit] (the consumer feels se-cure in owning a home), epistemic [t>enefit] (the novelty ofpurchasing a home is enjoyable), and situationat [benefit](^ starting a famity)"! (Sheth et at. 1991; p. 163).

Perceived Product BeoefltsGeneric product benefits are intended benefits that manufac-

turers design into a product. However, these intended benefits mayor may not be perceived or appreciated by particular consumers. Aproduct has benefit to customers to the degree that they canperceive, appreciate and then use that product as anticipated con-sumption activities to achieve personal values. Normann andRamirez (1993) recapitulate this concept well; "A company'sofferings have values to the degree that eustomers can use them asinputs to leverage their own value creation. In this respect, then,companies don't profit from customers. They profit from custom-ers' value-creating activities" (p. 74). In sum, consumers perceiveand appreciate product tienefits via their personal consumptionvalues and consumption schemata; these product benefits aretermed "PerceivedProduct Benefits" (Day 1990).

iThe braces are the author's, to substitute the word "benefit" for theoriginal word "value" and avoid confusion. The parentheses,however, are in the original passage.

In summary, the framework of consumers' product valuationdelineates the relationship between "personal values", "genericproduct benefits", and "perceived product benefits" via "consump-tion values" and "consumption schemata" (see Figure 1). That is,it iltuminates the structure of consumers' product vatuation andhow and what benefits consumers may perceive from products.With this framework of product vatuation for consumers and itstypotogy of product benefits in ptace, the current paper proceeds toinvestigate the concept of customer vatue.

A MODEL OF CUSTOMER VALUE FORCONSUMER MARKETS

Customer Value and Consumer ValuesMany marketing strategists and industriat-organization (I.O.)

economists emphasize that creating superior "customer vatue" is akey etement for companies' success (Day 1990, Porter 1980).However, what they mean by "customer vatue" is quite differentfrom the meanings of the "consumer vatues" we have discussedabove. "Vatue" to marketing strategists means a return for some-thing in an exchange (e.g., the vatue of the dotlar is variable).Therefore, the meaning of "customer value" is a levet of return inthe product benefits for certain amount of customer's money (i.e.,the price) in a purchase exchange (e.g., to give the buyer good valueat the right price). In addition, the concept of customer value has bynature a normative perspective, since it is a fundamental conceptunderlying the competitive analysis in the field of I.O., based oneconomic principles and the customer's choice in the market.

Consumer behavior researchers, on the other hand, generallyuse the word "values" to mean something desirable, useful, orimportant (Peter and Olson 1990). Our previous discussion alsoadopted this meaning. Consumer research usually is based on adescriptive-study perspective, such as in the fields of anthropology,sociology, and psychology. Therefore, "consumer va lues" refers tothe important personal goals that consumers are seeking (Wilkie1990). Furthermore, consumer behavior researchers emphasizethat people can achieve some of their personal values throughpossession or consumption of products (Peter and Olson 1990;Sheth, etal. 1991).

In summary, "customer value" normatively focuses on abuyer's evaluation at the time of a product purchase, while "con-sumer values" descriptively stresses people's valuation of productconsumption or possession. Consumer researchers wilt argue thatconsumers buy products not for the sake of its "transactional value"(asimple term forcustomer value) but for the product'sbenefits thatwill satisfy their needs or personal values. Our earlier discussionsof the process of consumer valuation explored the domain ofconsumer benefits in product consumption or possession. How-ever, in an exchange environment, product benefits alone do notcompletely explain consumers' product choice. Often, consumersmay find products very desirable. Yet, in assuming that theconsumer has adequate financial capacity, one must not equallyassume that a purchase must follow. These cases imply thatnormative points of view are also necessary in consumer choiceresearch. From an economics perspective, consumers may applycost-and-benefit evaluation to a purchase decision, at least when thecosts are "significant" to them (Olshavsky and Granbois 1979).Therefore, with respect to a sound customer value analysis for aconsumer market, both the descriptive and normative aspects areessential (Boyd and Levy 1963; Day 1990).

The current paper proposes a comprehensive model of cus-iomer value for consumer markets (see Figure 2), based on Day'soriginal idea of "value equation" and emphasizing customers'

Advances in Consumer Research (Volume 22) / 385FIGURE 2

A Model of Customer Value for Consumer Market

Customer Characteristics

Cognitive Traits: personality and attitude knowledge and experience personal values consumption schemata

Demographics:

age education Income and wealth* time resources

PerceivedProduct Benefits:

functionalsocial affective epistemic

aesthetic hedonic situational* holistic

PerceivedLogistic Benefits:

purchase convenienceordering timeparts and suppliesafter-sale service

Evaluation

central factors' peripheral factors

PerceivedCustomerValue

Perceived Costs:(purchase, consumption,

and maintenance)monetarycosts

time costs

riskshuman energycosts

perception (Day 1990). This model Integrates descriptive andnomiative points of view about consumer behavior, including theconsumer values expectation before purchase, customer valueevaluation at the time of buying, and value actualization in con-sumption or possession.

The ModelAccording to social psychologists, people's perception of

objects and events is influenced by their cognitive traits (e.g.,personality and attitude, personal values, and consumption sche-mata) and demographics (e.g., age, education, income and wealth,and time resources). As indicated in Figure 2, these factors of"Customer Characteristics" are the background of the customers'perception.

The buyers* evaluation ofa product purchase begins from theirperceived product benefits. The earlier discussions of consumers'product valuation have proposed a framework about how thecustomers perceive product benefits based on their terminal per-sonal values and instmmental consumption values (or consumption

schemata). In addition, the discussion has suggested and illustrateda typology of generic product benefits with e l ^ t categories. Asindicated in Figure 2, the model suggests that "Perceived ProductBenefits" could be a single type or a combination of the eightcategories of product benefits.

Nowadays, product benefits based on consumption or use ofthe product are not the sole benefits consumers can perceive (Day1990). They may also derive benefits of a purchase from the buyingactivities perse and other consumption supporting features. Treacyand Wiersema (1993) claim that today's customers have "anexpanded concept of value [purchase benefits] that includes conve-nience of purchase, [and] after-sale service" (p. 84), in addition tothe traditional product benefite, such as quality and price. Weconceptualize these new dimensions of purchase benefit and denotethem as "logistic benefits." Logistic benefits ofa product purchaseare those benefits consumers can derive from the buying per se andother (after-purchase) consumption supporting features about theproduct. These include the purchase convenience, buying pleasure,variety of choice, short ordering time, availability of parts and

396 / Consumer VaiuSf Product Benefits Mid Cui^mer Value: A Consumption Behavior Approachsupplies, warranty, and after-sale service. For the purpose of thisdiscussion, the current paper does not probe the typology of logisticbenefite. These logistic features, if designed by marketers in theproduct deal, are also subject to subjective consumers' perceptionsto become desirable benefite for customers. Moreover, the percep-tions of the customers are moderated by their personal values,consumption values, and other individual characteristics (see Fig-ure 2).

As mentioned above, the coste of obtaining the perceivedproduct and logistic benefite are usually the major concems ofbuyers, since consumers may apply principles of coste-and-benefi teto evaluate a purchase. The model proposes that the relevant costeof a purchase considered by consumer include monetary cost, timecost, risks, and human energy cost. Furthermore, every category ofthe costs may play a part in purehase, possession, consumption, andmaintenance. The monetary cost refers simply to monetary pay-ment. The time cost refers to the amount of time required for therelevant activities of acquisition or consumption. Consumersencounter risks when they face the uncertainty or potential negativeconsequences of consumer activities: being cheated, overcharged,or misled into buying an unnecessary product; while possessing orusing certain producte, such as unconventional clothes, may incursocial coste which include being teased by colleagues. Mainte-nance risks include being overcharged for supplies and or sufferingthe possibility that they will be discontinued. Finally, the humanenergy cost refers to physical effort, difficulty of operation, andcognitive energy; these might be of great concem to elderiy custom-ers. Nevertheless, all of these costs, like the benefits, are alsosubject to consumers* perception. Since perceptions of time,money, risk, and human energy vary among people, these coste maybe evaluated differently among customers.

According to the cost-and-benefit principle, customers evalu-ate the benefite against the coste and perceive the buying value ofproducte. As indicated in Figure 2, the inpute of evaluation are the"perceived product benefits", "perceived logistic benefits", and"perceived costs". However, as suggested by many paradigms inconsumer research, such as expectancy-value research (Fishbeinand Ajzen 1975) and elimination-by-aspecte analysis (Tversky,1972), not all benefite and coste are equally evaluated. Somebenefits and costs are considered central factors and are thereforeweighted heavily, while others are perceived as peripheral factorsand weighted less. This phenomenon conceming consumers'idiosyncratic pattems of weigh tingfor the evaluating factors is alsorefiected in the model.

Finally, the model suggests that customer value is a conse-quence of subjective evaluation which in tum results from thesumming up ofthe various perceived benefits and perceived coste,taking into account the differently weighted factors. In other words,the "perceived customer value" in the model is defined as thesurplus (or the difference) between perceived benefits and per-ceived coste (Day 1990); that is, it refers to a level of subjectiveretum for the customer perceived costs.

DISCUSSION: IMPUCATIONS FOR MARKETINGSTRATEGY

In the current model of consumer customer value, productbenefite, logistic benefite, and costs are defined in terms of consum-ers' perception in the activities of acquisition, consumption (orusing) and maintenance, as well as consumers' expectation ofpersonal values satisfaction before buying. In other words, ourconsumption behaviorapproach is holistic analysis-oriented, goingbeyond traditional "customer-oriented" methods which usuallyfocus on the buyers' economic evaluation at purchase.

As emphasized in the model, the importance of productbenefits, logistic benefite, and costs vary among people due to theirindividual characteristics. These phenomena have led in marketingpractice to benefit or cost segmentation the process of dividingconsumers into homogenous subgroups or segmente based on theirinterest in particular product benefite. The benefite most important(central) to target customers is a fundamental issue in marketingstrategies, such as product differentiation and positioning. Forexample, to succeed with a "value strategy" (also a high pricestrategy) a company needs to offer producte with premium qualityin the central benefits, such that their customers "correctly" per-ceive those benefite and are willing to pay the price premium(Treacy and Wiersema 1993). On the other hand, to make a "coststrategy" (or a low price strategy) profitable, a company must offerproducts with an acceptable level of quality in the central benefitsand minimal quality in the peripheral factors, such that theircustomers will enjoy the product and perceive the purchase as avalue (Normann and Ramfrez 1993).

The current paper's implications for market positioning areclear: its categorization of generic product and logistic benefitemay help marketers identify their target consumers' central andperipheral benefits. Then, the typology could help companiesdesign their products and related marketing programs, such asadvertising and distribution.

Holistic Product Benefits and Marketing StrategyOne new category of product benefit introduced in the current

paper is the "holistic product benefits" customers may perceive andappreciate in a product constellation. This type of product benefithas been largely ignored in the literature. Their implications formarketing practice will be discussed next.

In consumption settings where multiple products are needed,the product constellation forms a "consumption system" (Boyd andLevy 1963). A consumer may obtain utility holistically from theproduct constellation based on a personal consumption schema.When a consumer tries to combine a product constellation and toconstmct from it a meaningful combination, certain dimensions ofcompatibility and complementarity between products may be criti-cal to perception of the products' benefits. TTiese dimensionsbriefly described here (for a detail discussion and examples, pleasesee Lai [1994]): (1) "functional exhaustivity" suggeste that prod-ucts are combined in a way that the required functions are com-pletely fulfilled; (2) "operational connectivity" suggeste that theoperations (or the physical shapes and positions) ofthe products aresmoothly connected. (3) "aesthetic coherence" relates to the senseof beauty or to personal expression in the product constellation;and, (4) "meaning-role consistency" refers to the perceived coher-ence between the cultural meanings of products and the social roleswhich the consumers assume (Solomon 1983).

The holistic product benefits may be a good basis for productpositioning. As defined previously in the cunent paper, holisticproduct benefit refers to the perceptual benefits acquired from thecomplementarity, coherence, compatibility, and consistency in aproduct constellation as a whole. A company could set itself apartfrom the competition by identifying and promoting itself as the bestprovider of certain holistic benefits of a product constellation tosatisfy consumer's needs. In pursuing a competitive positioningthrough holistic product benefits, the company may need to reshapeits business scope or redefine its product lines, and consequentlyobtain its sustainable competitive advantage.

Organizations can design competitive marketing strategiesbased on meaningful and desirable combinations of product ben-efits for their customers. How to select a competitive strategy and

the desirable benefits of the product will largely depend on thecompany's knowledge about the customers' consumption behav-ior. In addition, the relative defensibility of the strategy in themarket is another problem in selecting a competitive strategy. Theconsumption behavior approach to the customer value wouldprovide more strengths in strategy defensibility. For example, thepositioningthroughholisticproductbenefitscan enjoy the synergeticeffects derived from a meaningful product combination that isdeveloped from a comprehensive knowledge of customer con-sumption behavior. Furthermore, sometimes a company has tocoordinate a complementary business group (also a synergy gener-ating activity) to provide meaningful product combinations tocustomers (Normann and Ramirez 1993). In these situations, thedefensibility of the competitive strategy would be even strongerbecause of the synergetic effects. Normann and Ramirez (1993)recapitulate this implication for marketing strategy well: "One ofthe chief Stratege challenges ofthe new economy is to integrate [theconsumption behavior] knowledge and [the interfirm] relation-ships devise a good fit between [companies'] competencies andcustomers [(customers' needs or individual values)]..." (p. 74).

CONCLUSIONThe consumption behavior approach to customer value can be

an effective way of achieving more innovation, enhancing cus-tomer value, and obtaining greater marketing penetration andstrategy sustainabllity. Consumption, like production, involves aconstellation of pxxls and consumption values or desirable ben-efits. If marketers think of consumers as engaged in a constmctiveprocess by which they achieve their consumption values, it may beeasy to see that a variety of holistic benefits are involved ascustomers use the products (Boyd and Levy 1963). Although themarketers may already plan and act in terms of consumer needs andbehavior pattems, they can gain even more insight if they studyconsumer's consumption behaviors in which their products play apart. For knowledge of the customers' consumption behavior to betruly meaningful, much more would have to be known about thecustomers* personal values, feelings and thoughts, and consump-tion values. In other words, understanding the consumers' con-sumption behavior means that their activities should be analyzedthoroughly and holistically, from the expectation about consump-tion values at the prepurchase stage, to the purchase evaluation atthe stage of selection and acquisition, to consumption valuesactualization in the stage of use, possession, and maintenance.

Onecaveataboutcustomervalue: greatercustomervaluedoesnot necessarily equal greater customer satisfaction. Customervalue is defined as the difference (or surplus) between benefits andcosts; it is a level of retum for customer costs. From a cognitiveperspective, according to expectation theory, satisfaction is theresult of a comparison between what actually occurs and what isexpected. Hence the customers' buying satisfaction depends onboth their perceived value of the purchase and their knowledge ofwhat a fair level of buying value should be. In short, customers willfeel satisfied to the extent that the perceived value of their buyingexceeds the standard they hold. From this point of view, exceedingvalue is the key for customer satisfaction, not customer value per se(a surplus value). This issue can be viewed as an avenue for furtherstudy.

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