Value is central to almost every discussion on economics, business and marketing. Although the term ‘value’ is sometimes used rather freely in everyday conversations, thereby diminishing its importance from an economic perspective, in essence, it is at the core of every human activity. Value is what we derive from everything we do in life. It is the outcome that brings us joy – or leaves us desiring it.
Value has its roots in human needs and wants – and the satisfaction we achieve or experience from fulfilling (or not fulfilling) these needs and wants. Theories suggest that there is a hierarchy of needs that we (as human beings) desire and experience, starting with physiological needs (like food, water, sleep) and progressing to needs for safety and security, social recognition and belonging, esteem and self-worth, and finally self-actualisation.
These human needs and wants are fulfilled by physical good and services which are either freely available (i.e. available in abundance such as air and water) or are scarce and, hence, available to us at a price. From an economics, business and marketing point of view, the value of these need-satisfying goods and services can be determined only if the goods and services are scarce – and, therefore, command a price.
This means, the value of goods and services is determined by the relationship we have with these goods and services in terms of their availability or scarcity in this world, and their ability or capacity to fulfil our needs and wants. The value of goods and services is therefore neither a part, nor an attribute or property of the goods and services. In other words, goods and services have value only if we are dependent on them.