He economic value Is the maximum amount of money a consumer is willing to pay for acquiring a good or enjoying a service in a free competition economy.
It must be differentiated from the market value that represents the average amount that a consumer will pay for goods or services with similar characteristics.
In the economic sense, the word value is related to the consumer's desire to obtain a good or experience a service.
Valuation is subjective, however, the subjective fact that many people desire a particular article or service, is an objective economic reality.
Economic value is a concept that derives from the analysis of how the consumer selects within multiple articles, those in which he will invest his limited resources, managing to satisfy only some of his multiple needs and trying to maximize his well-being.
There is no precise mathematical formula for determining the economic value of a good or service as it encompasses the tangible and intangible characteristics of a product.
The tangible character is based on the functionality of the product, while the intangible focuses on the consumer's emotional affinity for the good.
Economic value is not a static figure, it can be affected by the change in the quality standards of products and services, the decrease in purchasing power by the consumer, the variation in macroeconomic indicators such as inflation and scarcity indices or simply The change in tastes and preferences by the consumer.
Some Examples of Economic Values
Emerson (2000) argues that economic values are created by taking an input or set of inputs, transformed into products and services that bring greater benefits to the consumer.
Kevin Maney (2010) explains that the consumer evaluates the benefits in terms of two main features: convenience and fidelity.
Products and services that are fast to obtain, easy to use, flexible and reliable are convenient; on the other hand, those that offer quality, status, aesthetic appeal and emotional impact are high fidelity.
Examples of economic values can be seen in most successful for-profit corporations.
Then 10 examples of everyday life where economic values impact on society is evident listed.
1- University Degrees
According to a study conducted by Georgetown University in the year 2015, professionals specializing in the fields of science, technology and engineering enjoy considerably more economic value than professionals working in the areas of art, education and administration.
The labor field gives higher salaries to professionals who manage to develop certain skills and abilities.
2- Organic Foods
During the last decades there has been an exponential growth in the demand for organic products, motivated mainly by the adoption of healthier lifestyles by society and also by its growing interest in preserving the environment for future generations.
The consumption of organic food promises a longer and healthier life, but also implies for the consumer to invest 10% to 30% more of the regular budget in the purchase of food (Lohr 2001), which clearly shows that the economic value granted to Organic food is greater than that given to conventional food.
3- Starbucks Coffee
Dr. William S. Silver in his speech at TED in 2013 notes that enjoying a cup of home-cooked coffee costs only a few cents.
Buy it in an independent cafe, a couple of dollars, but buying it at Starbucks will always be the most expensive option.
What makes Starbucks for the consumer assign greater economic value to the cup of coffee that the company markets? Many authors claim that the difference lies not only in offering superior products and services.
What Starbucks does is create an emotional bond with the consumer, allow you to enjoy the shopping experience and make you feel part of a special group.
4- Evian
At present, a great number of spring watermarks with relatively similar characteristics can be found in the market, nevertheless of all of them Evian stands out for being the most attractive and of greater economic value.
Since its appearance on the market, spring water has been used not only to quench thirst, but also for medicinal purposes and is even linked to human pleasure and entertainment activities.
This spring watermark is the favorite of important figures of the political, sports and entertainment world, which provides greater status to whoever consumes it and thus increases its economic value.
5- Clothing
The brands: Old Navy, Banana Republic and Gap are owned by the same company, Gap Inc. These three brands make similar types of clothing, but each one of them offers compensations that are decisive for choosing the purchase of different profiles Of consumers.
Gap Inc segment each brand, so that: Old Navy will be the one selected by the consumer looking for functionality, efficiency and low cost. Gap will be chosen by the customer looking for style and fashion at a moderate cost.
Banana Republic represents the ideal choice for anyone who pursues aesthetics and good taste at a premium cost. Each brand has its own personality and an economic value associated with it.
6- Brands Respectful of the Environment
Consumers not only select those products and services that represents the best alternative in terms of quality and price, more and more often their patterns of choice favor those brands that are respectful of the environment. Pain
The change in business strategy to capture the attention of customers can sometimes be simple, simply increase the content of recycled material within their production processes and show this fact on the label of the good, in order to achieve increase Its economic value.
7- Haute Couture
Couture, are exclusive pieces that take months to be made. A dress can cost from.000 to more than.000, so they represent a style statement and a status symbol for the purchaser who acquires it.
The economic value of haute couture dresses lies in its aesthetic appeal and in the creativity that makes the designer manifest when developing a unique and tailor made piece of the customer.
8- Distance Education
Learning through the use of technological tools is becoming more reliable, specialized and friendly for professionals who face a highly dynamic life, and who wish to expand their knowledge on certain topics of interest.
This type of tool has a high economic value because it optimizes and flexible the use of time for the information-hungry consumer to increase their knowledge.
9- Amazon
Today, Amazon.com is the most successful online store in the world, where one click can be purchased from hand soap to vehicle spares. Amazon also has an accurate home delivery system.
The high economic value of this company is sustained in terms of efficiency, speed, reliability and good service.
10- Elite Education
The economic value in university education is seen not only from the perspective of knowledge that will be acquired, but also include other factors such as the level of influence and relationships that the student can acquire during his formative years. All these parameters will ensure future professional success.
References
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- Brookes, S. (2016). The Selfless Leader: A Compass for Collective Leadership . London, Palgrave.
- Dimitri, C., and Oberholtzer, L. (2009). Marketing U. S. Organic Foods: Recent Trends from Farms to Consumers . Washington, USDA.
- Maney, K. (2010). Trade-Off: Why Some Things Catch On, and Others Do not . New York, Broadway Books.
- Kaufman, J. (2013). The Personal MBA, Master the Art of Business . London, Penguin Books.
- Olson, E. (2009). Better Green Business: Business: Handbook for Environmentally Responsible and Profitable Business Practices. New Jersey, Pearson Education Inc.
- Jackson, A. (2014). Amazon®: How Jeff Bezos Built the World's Largest Online Store . Broomall, Mansoncrest.
- Thelin, J. (2013). The Rising Costs of Higher Education: A Reference Handbook . Santa Barbara, ABC-Clio.
- Economic Value. Recovered from: investopedia.com
- What is Economic Value? Recovered from: marketbusiness.com
- Dizik, A. (2015). BBC: Secrets of couture: The world's most exclusive clothing. Retrieved from: bbc.com.