Perceived Value

AAA

DEFINITION of 'Perceived Value'

The worth that a product or service has in the mind of the consumer. The consumer's perceived value of a good or service affects the price that he or she is willing to pay for it.
For the most part, consumers are unaware of the true cost of production for the products they buy. Instead, they simply have an internal feeling for how much certain products are worth to them. Thus, in order to obtain a higher price for their products, producers may pursue marketing strategies to create a higher perceived value for their products.

INVESTOPEDIA EXPLAINS 'Perceived Value'

Perceived value is often used with perfumes, for example. Perfumes tend to be associated with a glamorous celebrity in order to create a mystique and perception of luxury. Alternatively, they may be the subject of elaborate and expensive advertising campaigns to create a strong image for the perfume. Consumers commonly do not realize that the costs of production for perfumes are relatively low. Thus, while the cost of production for perfume may be only a few dollars, the perceived value of a perfume can be far greater.

RELATED TERMS
  1. Market Value

    The price an asset would fetch in the marketplace. Market value ...
  2. Full Value

    The total worth of a financial instrument or organization. Full ...
  3. Expected Value

    Anticipated value for a given investment. In statistics and probability ...
  4. Relative Value

    A method of determining an asset's value that takes into account ...
  5. Rich Valuation

    An asset that is being valued by investors at a very substantial ...
  6. Subjective Theory Of Value

    The idea that an object's value is not inherent, and is instead ...
RELATED FAQS
  1. Why is product differentiation important in today's financial climate?

    Product differentiation is essential in today's financial climate. It allows the seller to contrast its own product with ... Read Full Answer >>
  2. What are examples of economic values in use today?

    The education sector is one of the areas that demonstrates the concept of economic value. Students attach different values ... Read Full Answer >>
  3. How does a long tail become profitable?

    A long tail becomes profitable because the costs to produce, market and distribute a product or service in a niche are low, ... Read Full Answer >>
  4. How do companies with a large product portfolio use BCG Analysis?

    BCG analysis is used to evaluate an organization's product portfolio in sales planning and marketing. It is specifically ... Read Full Answer >>
  5. What are the similarities between product differentiation and product positioning?

    Product differentiation and product positioning are important elements in a marketing plan, and most marketing strategies ... Read Full Answer >>
  6. What are the major categories of financial risk for a company?

    There are many ways to categorize a company's financial risks. One possible perspective is provided by separating financial ... Read Full Answer >>
Related Articles
  1. Markets

    The 4 Basic Elements Of Stock Value

    Investors use these four measures to determine a stock's worth. Find out how to use them.
  2. Active Trading

    Warren Buffett: How He Does It

    We look at the Sage of Omaha's methodology for evaluating value stocks.
  3. Options & Futures

    Finding Undiscovered Stocks

    Wall Street tends to focus on large cap stocks, leaving other stocks under-followed and undervalued.
  4. Investing Basics

    Understanding The Time Value Of Money

    Find out why time really is money by learning to calculate present and future value.
  5. Markets

    Intangible Assets Provide Real Value To Stocks

    Intangible assets don't appear on balance sheets, but they're crucial to judging a company's value.
  6. Professionals

    Advisors: Do You Need to Tweak Your Marketing?

    Advisors use a variety of marketing techniques to attract clients, but they don't all work. It may be time to evaluate what is, and isn't, successful.
  7. Economics

    Understanding the Product Life Cycle

    Product life cycle is the period of time during which a product is conceived and developed, brought to market and eventually removed from the market.
  8. Professionals

    Advisors: Get Those Referrals! (Here's How)

    If you're not talking to your clients about referring you to friends, you should be.
  9. Stock Analysis

    Where Does Yahoo (YHOO) Go From Here?

    Yahoo operates in a competitive environment, but if it makes the right deals there's no reason why it can't thrive.
  10. Professionals

    How Top Advisors Innovate to Stay Ahead

    Successful advisors are innovative, reaching out to a new generation of clients by embracing new technology.

You May Also Like

Hot Definitions
  1. Topless Meeting

    A meeting in which participants are not allowed to use laptops. A topless meeting organizer can also ban the use of smartphones, ...
  2. Hedging Transaction

    A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging ...
  3. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  4. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  5. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  6. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!