Philip Kotler Equation: How Does It Work?
Posted: Sat Jan 18, 2025 9:32 am
Philip Kotler's equation for generating customer value is just one, but there are three ways to use it, and we'll look at each of them in this article.
But, before anything else, we need to understand what the elements of this equation are, shall we?
Equation to generate value for the customer
Every consumer, when examining a product or service offer, performs a kind of “mental calculation” , in which they add up all the value they perceive in the solution presented by your business and turkey phone number resource subtract all of its specific costs.
What is the result of this equation? What we call Value Delivered to the Customer , this is the element that we need to highlight in the sales process, did you know?
And what are the elements that make up the Total Cost to the Customer? These four:
Image value;
Staff value;
Value of services;
Product value.
The sum of the values subtracted from the costs gives rise to the Value Delivered to the Customer.
Let's understand these elements better?
Total Cost to Customer
Oh, and don't forget that this definition of costs isn't restricted to price, right?
1. Psychic cost
The consumer you do business with carries the responsibility of making a serious decision, which can have a positive or negative impact on the company they work for.
Therefore, the best way to reduce the psychic cost is to bring materials , such as cases, concrete data, quality information and other elements that make the buyer feel safe and confident about the solutions offered by your business.
2. Physical energy cost
We’ve already talked about the mental stress involved, but it doesn’t stop there. There’s also energy that the buyer must expend to analyze your offer and negotiate with you, right?
Want examples?
How many meetings will he attend? How many reports will he have to read and analyze? Will the meetings be in person or online?
In other words, you must be practical and objective in your arguments, in order to make the consumer's life as easy as possible. Another tip is to offer samples, infographics, e-books, etc.
Allow your interlocutor to make as little effort as possible to make the purchasing decision with comfort and peace of mind .
But, before anything else, we need to understand what the elements of this equation are, shall we?
Equation to generate value for the customer
Every consumer, when examining a product or service offer, performs a kind of “mental calculation” , in which they add up all the value they perceive in the solution presented by your business and turkey phone number resource subtract all of its specific costs.
What is the result of this equation? What we call Value Delivered to the Customer , this is the element that we need to highlight in the sales process, did you know?
And what are the elements that make up the Total Cost to the Customer? These four:
Image value;
Staff value;
Value of services;
Product value.
The sum of the values subtracted from the costs gives rise to the Value Delivered to the Customer.
Let's understand these elements better?
Total Cost to Customer
Oh, and don't forget that this definition of costs isn't restricted to price, right?
1. Psychic cost
The consumer you do business with carries the responsibility of making a serious decision, which can have a positive or negative impact on the company they work for.
Therefore, the best way to reduce the psychic cost is to bring materials , such as cases, concrete data, quality information and other elements that make the buyer feel safe and confident about the solutions offered by your business.
2. Physical energy cost
We’ve already talked about the mental stress involved, but it doesn’t stop there. There’s also energy that the buyer must expend to analyze your offer and negotiate with you, right?
Want examples?
How many meetings will he attend? How many reports will he have to read and analyze? Will the meetings be in person or online?
In other words, you must be practical and objective in your arguments, in order to make the consumer's life as easy as possible. Another tip is to offer samples, infographics, e-books, etc.
Allow your interlocutor to make as little effort as possible to make the purchasing decision with comfort and peace of mind .