Final answer:
There are three types of customer value created by a brand: functional value, emotional value, and social value. These can be influenced by tangible aspects of the product and services offered, as well as intangible factors such as advertising and brand reputation that shape consumer preferences and perceptions.
Step-by-step explanation:
Customer value created by a brand can come in multiple forms. Often, this value is categorized into three types: functional, emotional, and social value. Functional value is the basic utility or practical benefits that a product offers, such as durability, convenience, or cost savings. Emotional value is the positive feelings or satisfaction a customer gets from a product, which can be derived from its design, brand reputation, or the experience of using it. Lastly, social value arises when a product enhances a customer's social self-concept or standing among peers and is closely linked to brand image and status.
Intangible aspects often contribute significantly to these values. For example, a brand's guarantee of satisfaction or a money-back promise can create functional value by reducing perceived risk, while a reputation for high quality contributes to both emotional and social value. Services like free delivery add functional value by improving convenience, and offerings such as loans to purchase products can make items more attainable, adding to their functional value. Advertising can play a critical role in shaping these intangible preferences, influencing not just practical choices but also emotional and social perceptions.
Product differentiation often occurs in the customers' minds, where habits and marketing over time have instilled strong brand preferences. For instance, despite the inability of many consumers to distinguish between different varieties of ketchup or mayonnaise in a blindfolded taste test, brand loyalty remains due to advertising influence and past habits. Here, the brand creates emotional and social value that surpasses the mere taste of the product.