Sandra, a buyer for a small construction company, is looking to purchase a tractor from Komatsu or Caterpillar. Sandra visits both showrooms and speaks with the sales people to hear their offers. She is looking for a reliable, durable tractor for residential construction work. She evaluates both tractors and decides on the Caterpillar. She chose it for not only its perceived durability and performance reliability, but also for the differences in the added-on services such as training, delivery, and maintenance. She also places higher value on the Caterpillar reputation and long company history. Even though the Caterpillar costs $1500 more than the Komatsu, Sandra agrees that the perceived values are worth the additional cost.

Caterpillar has done a good job with which of the following?

a) caterpillar reduced its perceived costs enough to undercuts its competitors
b) caterpillar communicated the price of its products well but not its value added traits
c) caterpillar increased the value-added perceived benefits to meet and exceed customers expectations

c) Caterpillar increased the value added perceived benefits to meet and exceed customer expectations.

Explanation:

A Customer's perceived value refers to the difference between all the evaluated benefits and costs of a product and the cost-benefits of other available alternatives.

Perceived value is the cognitive value which a prospective buyer anticipates. This value can be based upon several factors such as brand loyalty, company reputation. add on services, durability, reliability or after sales services of a product.

In the given case, the customer opted for caterpillar not merely on grounds of performance reliability or durability but also assigned importance to the brand reputation and add on services caterpillar provides.

Though, the cost appears more, but in the customer's cognitive space, the benefits and satisfaction derived would exceed the excess cost.

This indicates caterpillar having effectively increased it's value added perceived benefits which meet and exceed customer satisfaction.

answer/// real gdp decreases to y3 and the price level falls to p3;