Published by MBA Skool Team, Last Updated: June 07, 2016
What is Actual Value?
Actual value can be defined as the total actual cost incurred in making a particular good or providing a particular service. This is incurred by the manufacturer or service provider and may differ from the amount that he gets on selling that particular good or providing that particular service.
Value in marketing can be looked as either actual value or customer percieved value. Both of them are from the prespective of seller.
How it is different from Perceived value
Perceived value of a particular good or service may be higher or lower than the actual value depending on the perception of the consumers. Suppose a particular company incurs Rs 100 on manufacturing a particular good and sells in the marketplace at Rs 200. However the customers are willing to pay only Rs 150 for that particular product. In this case the actual value of good is Rs 100 while the customer perceived value is Rs 150.
Perceived value of a good also depends on the brand value and brand awareness of the particular good while actual value of good does not depend on the brand perception of that good.
Company such as P&G and HUL generally manufacture toothpaste which generally cost way too lower than what the customers actually pay. This is because of the goodwill that the companies have accumulated over a period of time and the perceived value of the good is higher than actual cost of the good.
A 2X2 matrix can be drawn and different goods and services can be placed in this matrix.
Hence, this concludes the definition of Actual Value along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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