In the famous Sunscreen Song, Mary Schmich says, “Accept certain inalienable truths: prices will rise, politicians will philander, you too will get old, and when you do you'll fantasise that when you were young prices were reasonable, politicians were noble and children respected their elders.” Maybe this is it. I am getting older after all. Or maybe I am paying the same (or even worse, more) for less.
The economic recession has placed value firmly in the spotlight. More Fraud and company failures have shaken consumer trust. Two simple concepts - value and trust - once seen as ‘hygiene' factors can now be used to create brand differentiation. But many brands seem to forget this as they struggle for survival and focus on their bottom line.
Conscious consumers are looking for brands that cost less, perform better, last longer and deliver on their promises. But companies are trying to ‘hide' their cost-cutting efforts to protect their bottom line. They think that consumers won't notice - but they do and this is causing dissatisfaction and distrust.
IOL and the MyBroadband.co.za blog discussed examples of this recently. They mention three instances where leading brands have reduced pack sizes and are still charging the same or in some instances more. When they were challenged these brands offered ‘good explanations'. One actually said that they did it to enhance consumer value even though consumers where left paying more for less. You can imagine the response.
Will this change when things get better? Perhaps. But consumers won't be able to ‘unlearn' what they've learned about value in the recession.
Value will continue to be pushed, pulled, stretched and redefined. Umair Haque, writing in the Harvard Business Review, in The value every business needs to create now, says, "The fundamental challenge for 21st century business is learning to create thick value. Thick value is sustainable, meaningful value and a new generation of radical innovators is wielding it like a strategic super weapon." According to him Wal-Mart is creating thick value, but even a well-loved brand like Apple needs to learn to create thicker value. "For now ask yourself how thick is the value you're creating? Are your profits, like mobile operators, built on hidden costs, surcharge and monopoly power or on awesome stuff that makes people meaningfully better off?" he challenges brands.
But what is the “awesome stuff” that makes people meaningfully better off? As with everything in marketing it starts with the consumers. You need to understand what is valuable to them, what they are willing to sacrifice and what they are willing to pay for. Then give it to them making sure it is a fair and honest exchange.
Needs-orientated consumer segmentation is one way of understanding what consumers really value, but an investigation of trends can also be helpful.
1. Trade-off versus rip-off
Many people might be willing to put up with less legroom, sitting closer to their neighbours and paying for their own lunch when flying on a low-cost airline. But they'll only do so if the price is fair. If not, it's not a trade-off but a rip-off.
2. The value of experience
Some might be willing to pay more for their cup of coffee when the buying experience makes their Monday morning just a little more bearable. This is a trend that has been leveraged a lot more effectively by some brands than others. Hail Vida e Caffé.
3. Perkonomics
Others are willing to pay for privileges, like saving precious time or being treated like a VIP. But then these so-called perks must deliver real benefits. Virgin Atlantic is one of the pioneers of this trend and manages it particularly well. From the complimentary limo to the onboard bar and fully flat beds, Upper Class provides real value-adding VIP treatment. As trendwatching.com puts it, perkonomics should not be confused with jerkonomics.
4. Superior quality
Many are willing to pay for quality but then the quality you deliver must be significantly better than that offered by the next brand. In the past month I have spoken to at least four people who now buy their vegetables at Fruit & Veg City instead of Woolworths. Woolworths' quality used to be worth the premium, but now that Fruit & Veg City has upped their game some people feel that paying a premium prices is just not worth it anymore. And if a brand you love is not perceived as offering you real value, you are not just disappointed. You feel ripped off.
5. The value of the invaluable
More ethical consumers, who are aware of their impact on the environment, are willing to pay more for environmentally responsible products. But greenwashing won't cut it and, as trendwatching.com points out, there is a move away from Eco-Ugly (ugly, over-priced, low-performing eco-friendly version of the ‘real thing') to Eco-Iconic (eco-friendly goods and services sporting bold, iconic design).
6. The value of design, status and self expression
Then of course there are those who are willing to pay for good design, status and the opportunity to express themselves.
As businesses and brands we have to ask ourselves what we value. If the answer is our customers, then we need to understand what is valuable to them and make sure the value we offer is real, fair and honest.
