A sustainable framework to determine customer perceived value for electricity products and services
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Date
2019
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University of New Brunswick
Abstract
Consumers’ perceived value (CPV) is a concept characterizing the customer-supplier interface. It helps suppliers to improve long-term business performance through a systematic approach quantifying value customers associate with purchasing a market product or service. Current applications are limited to highly competitive markets and there is a lack of agreement on its definitions, grounding theories and quantification approaches. This study aims to address this research gap by defining CPV more comprehensively and demonstrate a first quantification in investigating an underexplored traditional market, the energy sector. The research contributes to academic discussion through: 1) adding to theory by introducing a unified and general conceptual framework of CPV grounding upon CPV-related theories and approaches analyzing, synthesizing and harmonizing links across academic disciplines, 2) deriving an energy-specific model based on the sustainable development approach to investigate changes in the customer value creation process under the energy sector transformation as a result of renewable generation integration, market liberation and introduction of customer-oriented products and services, and 3) developing a first quantification methodology based on hedonic pricing method, identifying determinants in technical, economic, social and environmental dimensions with willingness to pay (WTP) as proxy for CPV from the supplier’s perspective, demonstrating its application and viability in an empirical study for the electric energy sector of New Brunswick. Results in this case show that economic determinants are the main contributing factor for segments of urban and rural customers, while social determinants are the key contributing factor for residential and industrial customers. This demonstrates the necessity of a more comprehensive and multi-dimensional model to develop products and services that better fit customers’ needs. The new framework offers the opportunities to be applied in other jurisdictions, but more importantly be also applied in other business sectors.