Determinants of Customer

Value: A Comparative Study of

Rural and Urban Customers

Dr. Tejinder Sharma

Department of Commerce
Kurukshetra University, Kurukshetra
sharmatejinder@gmail.com

&
Dr. Suresh Dhanda
HAFED
Conceptualizing Customer
Value
• Exchange worth (Hicks, 1959)
• Perceived worth in monetary terms of a set of
economuc, technical,s ervice and social benefits
received by a customer (Anderson, 1993).
• Overall revenue to a firm (Dess and Miller, 1993)
• Outcome of value gained through benefits and
value lost due to each cost (Bijapurkar, 1997)
• Market perceived quality, relative to price (Gale,
1995)
• Set of attributes (Chakraborty, 2000)
Conceptualizing Customer
Value
• Overall assessment of utility of a
product based on perception of what
is received and what is given
(Zeithaml, 1988)
 Synthesized view of
customer value
• Value is inherent to the use of a
product
• It is customer perceived and not
seller defined
• It is multidimensional
• Process of balancing give and get
components
 Research model of
Customer Value
• (Kotler, 2000)
Product Value
Total Customer Value

Service Value

Customer Delivered Personnel Value

Value
Image Value

Total Customer Monetary Cost

Cost

Time Cost

Energy Cost

Psychic Cost
 Objective of study
To compare the customer perceptions
of value of the rural and urban
customers
 Methodology
• Identifying the reference product
• Developing questionnaire
• Data collection and analysis
 Identifying reference
product
• Used reference product method over other
methods (internal engineering assessment, field
value in use were too technical, group value
assessment, compositional approach, conjoint
analysis entailed respondents’ limitations)
• Pilot survey on 60 customers (30 rural, 30 urban)
• Product rating of 20 selected consumer durables
on the acquisition effort
• TV emerged as common product on weighted
average of preference
 Developing questionnaire
• Multiple components of each component of value were
drafted on the basis of literature and expert opinion
• 105 item statements drafted (product value – 12, service
value – 20, personnel value – 14, image value – 22, monetary
cosr 15, time & energy cost – 10, psychic cost – 12)
• 5-point likert scale
• Pilot survey on 50 respondents (25 rural/urban each)
• 29 statements deleted, 8 added, 19 modified for language
• Reliability check (Cronbach alpha – 0.6754)
 Data Collection
• 320 respondents (160 rural; 160
urban)
• 100 males and 60 females from rural
and urban segments
• Represented north and south
Haryana
 Data analysis
• Exploratory analysis
• Factor analysis on each component of
value an cost, done separately on the
rural and urban customers
 Perceptions of product
value
• Product performance and safety emerged as the
most important determinant of customer value
for both customer segments.
• Rural customers associate performance with
technology, while urban customers associate it
with the latest features
• Urban customers lay more stress on quality
cerifications (ISO, etc.) than rural counterparts
• Elegance of looks is important factor
 Perceptions of product
value
• Assortment is viewed positively by
urban customers, but negatively by
the rural customers.
• Durability (longivity of use) covaries
with quality and innovation
 Perceptions of Service
Value
• Rural customers lay more stress on human
and pre-purchase service elements, urban
customers consider transactional elements
(installation, warranty, salesmen behaviour)
as more important
• Information availability is more important
for rural customers, while urban
customers value service support,
promptness, consistency, etc.
Perceptions of Personnel
Value
• Rural customers want high expression of
self among the society by way of
involvement, product customisation and are
influenced by the country image,
reputation of a firm. They tend to get
carried away by courteous behaviour of
salespersons.
• Urban counterparts want manufacturer’s
attention over image and reputation. They
rationalize the intangible offerings.
 Perceptions of Image
Value
• Rural customers give high importance to brand
over the urban counterparts.
• Rural customers exhibit group behaviour and peer
endorsement, dealer’s endorsement are more
important. They value familiarity, trust, reliability
and ignore exclusivity, quality certification)
• Urban customers do consider independent
testimony more than peer/family testimony, but
want exclusivity and differentiation.
Perceptions of monetary
cost
• Both segments exhibit almost similar
behaviour with respect to monetary cost
• Both have high propensity towards
discounts and finance schemes.
• Cost of usage and convenience of payment
is more important for rural customers than
their urban counterparts.
 Perceptions of time &
energy cost
• Effort is more important for rural
customers while time is more
important for the urban customers
(in line with the cultural traits of the
two segments)
• Rural customers do not see websites
or online media
 Perceptions of psychic
cost
• Risk aversive-ness and cost saving are
more important determinants of psychic
cost for rural customers.
• Information search is an important coping
up mechanism for psychic cost for rural
customers.
• Urban customers prefer involvement in
product design as a coping up mechanism
for reducing the psychic cost
 Conclusions
• Despite higher convergence, rural and urban
customers have certain differences.
• Human/emotional aspect and group behaviour are
more important for rural customers while the
rationality of value offering is more important for
the urban customers.
• Among the intangible cues, rural customers are
more sensitive to self esteem, peer endorsement,
while the urban customers look for exclusivity and
differentiation.
 Further research
• Refining/standardizing the scale for
measuring multi-product, multi-
attribute determinants of customer
value
• Changing dynamics of rural society
• New product penetration in rural
markets