Global Financial crisis of 2008: Not just a financial failure.

It was also a failure of value concept of market

Before I give my inputs on this very initial assignment given to us by our valued faculty I will
like to introduce the topic of Global Financial crisis of 2008 as well as throw some light upon the
Value concept of market and hence explain the interrelation of the two.
To put in just few lines Global financial crisis of 2008 can be defined as the subprime lending
which started in US in wherein loans were given to the financial institutions/organizations/people
who were subprime in nature of credibility to pay back the loans. As compensation a higher rate
of interest was levied upon these customers. The lending started in 2004 which ultimately lead to
bursting of housing bubble and hence the sentiments global investors who had invested in US
real estate market deeply took a toll. The crisis was so severe that it further paved way for the
2008-2012 global recessions. As a result the government had to opt for severe bailouts.
Value concept of market also known as customers perceived value is the subjective value that
customers associate with a product or service. It refers to the benefits that a customer perceives
and derives from a product. In short Value=Benefits/ cost and a positive value indicates the
customer associates higher benefits as compared to the cost involved.
The global crisis however was an utter failure of the value concept of marketing. Global
investors from across the world associated higher values of properties in US and invested hugely
in the real estate sector. The benefits that they perceived were higher than the actual value and
hence they investors readily paid higher amounts than actual value of the property. The result of
the same is an aftermath known to every one of us. So it is evident that is not necessary that what
actually consumer perceives is beneficial for him in a longer term. The perceived values may

backfire at times and lead to huge losses the way it did in Global Financial crisis 2008.What
might seem satisfactory at one point of time may prove detrimental loss at the other.