The Hindu Business Line : Why customers are fickle

WHY do customers shift loyalty? They do so because they seek value advantage in the company's offering said, Ms Rama Bijapurkar, strategic management consultant, at the Brand Summit on Thursday. Consumers, she said, figure out in their own way, with the computers inside their head, on what gives them this advantage. Even an illiterate consumer has his own way of figuring things out. And this may be different from the company's perception.

Ms Bijapurkar defines value as the benefits perceived by a consumer from a certain product or offering, minus the costs. Cost, in the value framework, she said, is not the price but could vary according to the category. In food, it could be cost per "stomach full", in industrial products it could be the total cost of usage, while in trucks it could be their lifetime cost.

"Consumers will go to what gives them the greatest value," she said.

The perceived value of any offering depends on how customers decipher it inside their heads and this hinges on two things.

One is value framework, which she likened to a map in the head, which consumers use to arrive at the offering's value.

The second part deals with whether consumers actually understand what the company's offer is. Their understanding of the offer, its value and whether it is good for them will be different from the company's perception, said Ms Bijapurkar.

Customers are fickle because value equations are changing - a value advantage today is gone tomorrow. However, it is not the customer who is changing the value equations; the change is from the manufacturer's side. New competitors are emerging always and redefining the value equation.

Citing the two-wheeler category, she said, "If you see the number of new models, every one of them is bringing in a new value equation to the table. Earlier, you only got fuel economy or styling. But today, if you look at any segment, new competitors are coming in and existing ones are getting better. If you look at India Inc, products and services are getting better and this is the frightening face of competition - value equations are changing by the minute."

The shifting value equation is not only due to competition in a single category but also because of "category collide or category competition".

A consumer's value equation for a certain product in a category could be influenced by what he or she spends on a product in another category, said Ms Bijapurkar.

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