Many people think that the most important thing for customers is the cost of the product. However, this is not a true statement. The most important thing for any consumer is the value of the purchase. The more significant the difference between the product cost and the deal, the more weight a person gets from the thing, and the more favorable the purchase becomes for him.
It is not favorable for the producer and seller to lower the product's value. To make a product in demand, it is necessary to increase its value. In this article, you will find recommendations from the digital marketer Julia Goncharenko.
Why the value of a product is more important than its cost
The product, as well as its value, carries great importance for the buyer. But in modern marketing conditions, using only "naked" arguments about low prices to increase sales does not work anymore. It is necessary to consider the high competitiveness of the market, which is growing exponentially.
According to the results of the American consulting company Gartner, it turned out that the vast majority of modern developers, in creating a new product, pay attention only to technology and functionality, remembering the product's advantages.
The consumer seeks assurance from the manufacturer about the actual value of the product he is buying. He is primarily interested in how the product will help him solve a problem.
What is "product value"?
Consumers perceive the value of a good as an understanding of the usefulness of the purchased thing, which becomes higher in comparison with possible alternatives.
For the buyer, the product that brings certain tangible benefits becomes valuable:
- Perfect quality;
- Long service life without loss of functionality;
- Achievement of sure success in society when using such a thing;
- Points of differentiation (benefits, product characteristics that cause a strong association with a well-known brand);
- Image and popularity of the item.
Benefits also include technical characteristics of the product (design, warranty and delivery conditions, reliability, number of functions, and service features).
Consumer value is a relative indicator because the consumer will always choose a product based on preferences, comparing offers and competitors.
There is a formula by which you can roughly calculate the value indicator:
Customer value = Product benefits - Costs, where:
Consumer value: customer value.
Benefits of the product: the help of the product. They include:
- characteristics of the goods (functionality, service life, reliability, technical performance, etc.);
- warranty conditions;
- peculiarities of service and post-warranty maintenance;
- delivery options and speed;
- company image and fame.
Costs: This includes not only the price of the product but also the time spent by the buyer, emotions and risks associated with the purchase.
A product becomes valuable to the consumer when costs are reduced, and benefits are increased.
When determining the value of a product to end users, manufacturing companies need to consider several things:
- A buyer will assess the value of a product twice. Before buying it and during the process of using it;
- The perception of the value of a purchase is a multifaceted thing. Therefore, the value of a product should be offered and stated at different levels;
- People are other, and they individualise their understanding of 'value'. Therefore, buyers may perceive the same product performance in different ways.
How do we create product value?
Manufacturers approach the creation of product value in different ways. It is necessary to consider the specifics of the product, the company's brand awareness, and the current state of affairs in the current sales market. We have prepared an average guide consisting of 7 steps that can be used to increase value.
Step 1: Enhance the benefits
Every product (or service) has some benefit. It is these that customers value. Understanding what stands out to the customer when purchasing and maximising this feature is necessary.
Example. A well-known manufacturer of home appliances has multiplied the sales of kettles by making their design premium and equipping them with an original sound when boiling.
Step 2: Enhance emotional benefits
Also, every product has emotional components that add value to it. But by playing up the emotions, you can't deceive your customers.
For example, a grocery product can evoke emotional value in the following situations:
- Absence of GMOs and cholesterol in the composition;
- Increased content of valuable vitamins and microelements;
- Naturalness of the product.
Considering such an emotional component, you can quickly increase the value of any product. At the same time, consider the nuances of the purchase's circumstances.
Step 3: Raising the price
The consumer associates a high price with the highest quality of goods (even if this is false). In the buyer's understanding, the inflated cost is explained by the ideal rate and the investment of great labour of the manufacturer in this thing.
This psychological feature can work in the opposite direction: for example, the same product, but at a lower price, is perceived as a product of low quality.
Step 4: Create an unusual story
With the help of creating a legend, you can repeatedly increase the buyer's interest in the product. Take into account that people love stories, especially when they evoke emotions. So, in this case, the product's value increases in the buyer's eyes, which becomes a prerequisite for raising the price.
For example, the Moleskine Corporation, which sells stationery items, increased the price of diaries several times, which quickly went viral. The story is that such legends used journals such as Hemingway, Pablo Picasso, and Van Gogh, which increased demand.
Any product can come up with a fascinating story. Please consider that it must evoke a response and be entertaining and unique.
Step 5: Starting a rumour
Rumours are a handy tool for promoting products. You need to know how to use them competently. Only an intriguing and well-thought-out rumour can cause incredible interest in a product and its rapid sale at a reasonable and profitable price.
For example, it was rumoured that British businessman Richard Branson used it successfully when introducing a new drink, Virgin Cola, to the market. Beforehand, he skilfully launched a story that the glass has the effect of Viagra and then safely debunked this rumour at a press conference. But the ingenious move of such marketing played its role - sales of Virgin Cola remained consistently high.
Step 6: Formation of artificial scarcity
If some necessary product becomes difficult to buy for the buyer, it goes into the category of scarcity. This creates additional demand and increases its relevance. Human psychology also plays a role here - if it becomes more challenging to buy a thing, it is very quickly bought up because it attracts something unique.
For example, a French baker increased sales of his baguettes by writing an advert that "Baguettes are sold in one hand in quantities not exceeding two pieces". By doing this, the businessman made it appear to his customers that the baguettes were being bought up very quickly. The move worked - the French baker's demand for baguettes increased several times.
Step 7. Connecting the secret ingredient
If the manufacturer adds unusual and original ingredients to the product's composition, it significantly increases buyers' interest and, accordingly, the product's value.
Such secret additives, for example, can include:
- Gold nanoparticles in creams;
- Unique gravy sauces in fast food outlets;
- The secret ingredient in Coca-Cola;
- Original spices and herbs in pizza.
- When choosing a secret ingredient for your products, remember that it should be exciting and potentially benefit the customer.
Conclusions
Promotion of any product in today's market always comes with risks for the company because the consumer, when choosing a product, is based on their individual preferences and formed tastes. Skillfully using marketing and knowing the current techniques, you can successfully attract most of the target audience to your side and make any product popular, even unfamiliar to the buyer.
The main thing is to create in your business to highlight the advantages, develop a competent advertising strategy, and implement the marketing plan.