Marketing 101 - Marketing objective 2: Value (Create and/or increase it)

Published in Marketing

Marketing objective 2:  Value (Create and/or increase it)

Value is the all to often overlooked part of marketing. Regardless of how many people you reach, nobody will make a purchase if they don't see the value in the product or service.

Why do we buy things? The answer is not simply because you want them or even because you need them. We often buy things we don't need. We buy things because our desire to own them exceeds the sacrifice required to get them (normally, how much money we must part with).

Of course needing something will contribute to vastly increasing the desire to own it (more than any other reason). For example, we need food, so we simply cannot go without it. The desire to get food is very strong indeed! But we can also desire something so much that we will even go without food to get it. It is the job of the marketing professional to cultivate that desire. Put simply: creating strong enough "purchase desire" will generate more sales and increase R.O.I.

So how do you create "purchase desire"? One word; Value.

I'm not talking about a monetary value. I'm talking about how valuable you perceive the product or service in question. Sure, cost/price can help to establish value, for example if a product is priced at $10 you may come to perceive it as being worth $10. If it then gets discounted the sense of value may increase because the price is now lower than it's perceived worth (this is why sales/discounting can be often be successful).

But cost can also is be a detractor. Money is something you loose in the exchange for the product or service. If the price is higher than the perceived value than people will do their best to avoid the product or find and alternative.

So, we have to create value; as much as possible. The more value we create, the less relevant the price is and the more sales can grow without resorting to discounts. Increasing perception of value helps protects the life blood of a business: the profit margin.  If the value is high enough people will be prepared to trade their cash for the goods and will worry less about the price.

Great examples of this are Apple products. Apple prices are towards the higher end of the market but the make up for this buy providing the best value; The best design, the best operating system, the best built in software, high build quality and lower cost of ownership.

So, how do we create value?

Value is created in a number of ways, only some of which the marketing departing can influence, so I'll split them in to two lists:

a) Value created outside the marking department:

  • Features of the product or service. The more the product can actually do, the more complete the service, the higher the value it will represent to customers and/or the more customers it will represent value to.
  • Quality. Quality of the product or service. This can include build quality as well as ease of use and user experience.
  • Specifications. The abilities the commodity has. A stronger motor, a better processor or even a better (measurably) service, all osuch things increase value perception.
  • Product/Service presentation. Although this is an area which should be a collaborative effort with the marketing department and others, it is often handled entirely outside of it, were talking here about packaging and display. In the case of a service, value can be greatly influenced by a quality website (you should consult a marketer or at least have some understanding of marketing to manage the design of a web page).
  • Product/Service differentiation. Rather than making a product the same as everyone else you can change it slightly to make it valuable to a niche market but with the goal of reducing competition by increasing the products relevance to a group. An example is a computer manufacturer who mages a "rugged" laptop for extreem out door use with extra long life battery, a tough case and water/drop resistance. They create a machine different to other laptops and therefore stand a good chance of make good sales to the group of people who really need those features. This is call market differentiation. You may have heard the term "unique selling point" which refers to the virtue of a product which makes it different and therefore reduces competition. For more on this research "Blue Ocean Strategy"

b) Value created by the marketing department:

  • Accentuating the positive. The more the customer is aware of the advantages the product or service will provide, the higher his or her perception of value will be.
  • Eliminate the negative. A good marketer can spin the negative so that it no longer seams bad. For example, an Andriod tablet typically has far fewer apps optimised for tablet resolution than the iPad. But you wouldn't say that. In fact most Android advertising simply talks about "tablet compatible apps" even though most are designed for the screen size of a phone. The product is promoted as having a vast quantity of compatible apps but no mention is made of the quality downside.
  • Increasing value by association. Sponsorship is the most obvious example of this. You can make a product look good by simply showing a good looking person wearing it. A celebrity endorsement will automatically align the value of the product with your value of the celebrity. It's all about image. The more you associate products and services with other good things, the more people start to think the belong in the same group. It increases their perception of value. The greatest example of this is undeniably NIKE t-shirts. These are seen so often by us worn by successful sports people that we start to use them ourselves to increase our own external perception even though they are arguably little different from any similar quality t-shirt save for the logo.
  • Addons (or added value). Buy two get one free. That's called adding value. It can be achieved a vast number of ways. On a computer you often get free software (a great way of adding value with minimal cost). What about free parking if you make a purchase? Anything additional you receive with it's own independent value proposition (i.e. anything freebee with it own value) will add to the overall perception of value and aid in making conversions (sales). Be careful to ensure addons create maximum additional value for minimum additional cost.

Summary: Value.

"Adding value" is the EQUALLY important sibling to "increasing exposure"
Remember. In marketing, you are NEVER trying to "sell something". You are always ONLY concerned with creating enough value that a sale is made. There is a big difference. If you try to "sell something" this turn people away and also create buyers remorse (when people regret thier purchase), which can lead to bad reviews/word of mouth. Think like the customer. What do they value?  Match their needs and desires with your product and create value to create sales.