Kotler's Value Equation

Kotler's Value Equation explains how customers evaluate the worth of a product or service. It suggests that perceived value = (Benefits received – Price paid) + (Personal significance or emotional connection). Essentially, customers weigh what they gain—like quality, convenience, or enjoyment—minus the cost or effort involved. When benefits and emotional value outweigh the price and effort, the product is seen as valuable. This helps businesses understand that increasing benefits or emotional appeal while managing costs enhances perceived value, leading to higher customer satisfaction and loyalty.