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CMA Final · Entrepreneurship and Startup · Value Addition

A startup providing a basic mobile app adds a free personalised onboarding and 24x7 customer support to every subscription without changing the price. Which view best reflects value addition from the customer's perspective?

Value rises only if customers perceive and benefit from the extra onboarding and support. Value is benefit relative to price, so with the price unchanged and useful added services, the customer gets more for the same money. Higher cost alone does not guarantee this.

  1. AValue is increased only if the customer perceives and benefits from the extra services, improving the benefit relative to priceCorrect
  2. BValue is increased automatically because costs have risen
  3. CValue is unchanged because the price is the same
  4. DValue is reduced because services are free

Explanation

Value from the customer's viewpoint is the benefit received relative to the price paid. Extra services that the customer finds useful raise benefits at the same price, so perceived value rises. Higher cost alone does not create value if customers do not care about the additions.

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