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Value Exchange

 

DisciplinesMarketing > Understanding Customers > Value Exchange

Description | Example | Discussion | See also

 

Description

In any effective transaction between people there is an exchange of value, where each gets something out of the exchange, even if it is relatively small.

This can be a deliberate exchange or can be embedded in social interaction and conversation.

Value is a perception of benefit, rather than something material. It may or may not be quantifiable and it may be highly valued or of limited value. It may also be unconscious rather than consciously assessed.

The only time where there is no value exchange is where one person is captive and hence bent to the will of the other.

Example

I chat with my friends to sustain the relationship so they may help me when I am in need. They also give me useful information. The value to them is similar.

A customer gets information about a product, including its price and availability, from a sales person. The sales person gets information about the customer to find ways to sell to them.

Discussion

A critical aspect of value exchange is that each side is content with what they are getting relative to what they are giving. The underlying principle that makes this work is that of barter, where people have a surfeit of some things (and hence value them less), and exchange them for things they need (which they value more).

A common social value exchange involves some combination of information, affirming relationship and soothing of troubles. A classic retail and business value exchange is money for goods or services.

In business, value is often defined in terms of the benefit to the company and hence is more quantifiable than social value.

In practice, people assess value in complex ways, including assessment of fairness in the exchange. If one person thinks that the other is gaining more value than they are, then they may be less satisfied, even though they accept the exchange.

Where there is a series of exchanges, such as in the typical supply chain, then value exchange at each point all the way up the chain is needed. A simple example is where consumers buy from retailers who buy from wholesalers who buy from manufacturers who buy from various suppliers.

See also

What is Marketing?, Valuing Customers

 

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