Editor's note: Sanjay K. Rao is vice president, Strategic Research Insights, a Princeton, N.J., marketing research and consulting firm. 

Understanding how consumers make purchase decisions is crucial to assessing a product’s value. Equally important is a rational method to allow value to be parsed into constituent components of the product so that strategic decisions about product component value are enabled.

This article outlines a marketing research approach to determine how customers of a smartphone value its specific features as well as that of its competitors, what value they impute to such features and how a marketer can monetize such valuations.

A version of the method discussed in this article was implemented by the author in a landmark litigation matter (Apple Inc. v Samsung, case No. 11-CV-01846-LHK 2014) to determine component valuations for smartphones, tablets, digital media players and laptops. The jury awarded damages to one party according to estimates derived by the method. 

Assessing the monetary value of a product, its components, a portfolio of products or a business entity with a collection of such assets is vital for a number of strategic purposes such as creating valuable products, pricing products on the basis of value, structuring deals for mergers and acquisitions, in/out licensing assets, estimating royalty rates, damages and verifying claims in intellectual property litigation. 

In the rapidly evolving digital age the science of assessing such value has demanded new methodological approaches. The reason for this stems from the unique nature of relatively complex product offerings that are becoming available. Smart digital devices, online product and service offerings, telecommunication packages, consumer financial products, specialty biotechnology products or medical devices, for example, contain a multitude of components, many of which represent complex, pate...