[Solved] The Value Model Theory

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[Solved] The Value Model Theory

This paper revolves around the Model Theory. You are required to present a report on Model theory and clearly state Value model theory on the budget and on the SWOT in your report. You are required to give relevant examples and present appropriate reference list in your report.

Model Theory on the SWOT

According to Greshes (2012), the value model theory suggests that value of customer is positive where his or her product or service quality perceptions are greater than the financial sacrifice perceptions. The theory also suggests that the value of the customer for the items provided is negative where his perceptions of the product’s quality are lower than his perceptions of financial sacrifice. From the SWOT analysis, one of the Hotel’s strength is provision of high quality services. Providing high quality services contributes in creating a positive perception of the customers. Customers always want to realize the value for their money. The fact that the Hotel is strategically located is another factor that adds value to their customers. Customers always want to access goods and services that are readily available and are convenient to access. The guest loyalty program offered by the Hotel Détente is another factor that would improve the value for their customers. The free accommodation and meals offered by the hotel through the loyalty program has high prospects of adding the customer’s value. This would consequently attract and retain many customers.

Brand power is another key concept in the value model theory. The hotel should look forward to make their brand popular in order to attract and retain customers. Although Hotel Détente’s brand is not so popular, some customers consuming other brands may be ready to shift due to lack of satisfaction. Investing in promotional activities would be advisable for the hotel as it would popularize the brand. The hotel should also set standard prices for their services. Standard pricing adds value to the quality of the service. On the other hand, the hotel can focus on matching the high prices for their services with respective high quality services. High priced products are perceived to be of high quality by customers. Standard pricing coupled with high quality services would definitely add the level of perceived customer value (Greshes, 2012). The hotel can create a competitive advantage through customer satisfaction and provision of high quality services.

Value Model Theory on the CIP Budget

            The hotel should allocate a portion of their investment on customer value addition. In the first year of operation the company did not allocate any money to avenues that would add value to the customers. Customer value creation results to attraction of more customers hence higher profits. The additional investment for valet parking worth $6000 is commendable since it aims at improving the customer convenience hence adding to their value. Provision of auxiliary services to customers would enhance customer satisfaction for the hotel. Additional investment on guestroom cleaning and front desk soft food redo is a wise step for the hotel. This would definitely improve the level of service quality which would hence improve on the perceive service quality rating by the customers. The cost of investment would definitely be recovered from expected high profits (Greshes, 2012).

The hotel should compensate the high quality services with high product and service pricing. High quality service would definitely catch the attention of any prospective customer. The additional investments in year four and five of executive lounge and customer loyalty program respectively are customers orientated hence are commendable. The budget however shows that no amount allocated to branding and marketing of the hotel or its products. The hotel should consider restructuring their budget and allocate a significant amount to brand promotion (Greshes, 2012).