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The car industry Essay

Value Analysis is an approach employed in the car industry to help asses the perceived value of a customer regarding a certain product. This technique was developed in order to analyse whether the retail price of a product is deemed appropriate by a certain customer as opposed tot eh value-benefit it has to offer. Although perceived value can have various traits such as functional capabilities, quality, emotional appeal etc. value analyses of this sort is usually limited to the functional capabilities along with performance of a product and then compared to its starting retail price.

In relation to the automotive industry, the initial retail price of a product is taken. This is so due to the fact that the initial price that a customer is exposed to via the media is what needs to be assessed. Hence once this is taken as a starting point, other aspects relating to the product such as specifications, derived value and discounts are incorporated. Unlike other value analysis techniques (Crow 2002), this technique is tailored for use in the auto industry.

Once a value is arrived at using the technique, it is then compared with overall sales of the product. This helps in assessing various issues

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such as whether the value proposition of the product is up to par, whether the customer is being informed properly about the product or not, what differences between perceived value and actual sales are present and why, what impact does this have on brand equity and whether brand equity has anything to do with the difference between the two.

This way, marketers can pin point the problem and address it accordingly. Since such analyses are conducted on a regular, monthly basis, it helps in gauging the situation in time to re align promotional strategies in a more adaptive manner. Mitsubishi’s ‘Better Built Better Backed’ campaign is an example of how a whole campaign can be centred on the results of a value analysis measurement. Although from an advertising point of view the leaflet is a bit cluttered and has too much information in it, the value proposition is clear and extensively put.

The advertisement lists all the specifications of the automobile along with fringe benefits such as 24 hour service, 5-10 months warranty etc. This has certainly helped Mitsubishi differentiate from its competition in terms of not just price but the overall value proposition as well. Despite of having a higher price, this aspect too has helped it differentiate itself from the competition. The overall feel is of a car with added value and thus a higher price but the additional benefits more than offset the change in price.

The campaign itself is centred around the proposition of a better built car with a strong company backing in terms of after sales services etc. and since all auto firms should look forward to adapt a more customer lifetime value centred strategy, this campaign gives Mitsubishi a good head start in this regard. Furthermore, it also has the awards to prove it (Car of the year Award) which again adds to its brand equity thus resulting in loyal customer that would hopefully stay so for a longer time.


Crow, K.2002 DRM Associates: VALUE ANALYSIS AND FUNCTION ANALYSIS SYSTEM TECHNIQUE [Online], Available at, http://www. npd-solutions. com/va. html Haenlein, Michael, Kaplan, Andreas M. , Schoder & Detlef 2006, Valuing the Real Option of Abandoning Unprofitable Customers When Calculating Customer Lifetime Value, Journal of Marketing, 70 (3), 5 – 20. Jonker J. J. , N. Piersma & Dirk Van den Poel 2004, Joint Optimization of Customer Segmentation and Marketing Policy to Maximize Long-Term Profitability, Expert Systems with Applications, 27 (2), 159-168.

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