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Thursday, August 2, 2007

Perceived value of service

Hello there you blogivores! If you're this deep into the blogosphere, you must be "someone with a large appetite for blogs."
Do you remember what I said about value? Well, you don't need to remember, you can just refer to previous posts.
I want to put something in perspective here, and it's perceived value of service. What that means is someone will pay more for an identical product if they buy it from someone with an outstanding reputation. Your average individually-owned car fixit place will charge a lot less for an hourly labor rate than a car dealer, but most dealerships make a lot of money in their service departments. How can this be? Easy, most customers have incentive to return to a dealership, whether it's something tangible like a discount or freebie, or maybe something intangible, like trust. A lot of people take their cars back to the dealer for service because they have developed a relationship with that dealer, whether they realize it or not. Customers see a nice clean shop and guys in uniforms and think their car is in good hands, and it usually is. That is perceived value of service. Joe Fixit might charge half the labor rate of the dealer, but does he have any model-specific software or tools? Can he really say he is a factory trained technician? In all probability he could be factory trained in several makes, just ask him, he may even have a specialty. Is the dealer really worth twice the money for labor? That depends on what you need done to your car.
That's all for now, stay tuned because I may say something intelligent soon...

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