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Creating Customer Value
There is a big difference between value and price and very often a portion of an item's value is intangible. Look around you at the things you have bought or the purchased items arrayed around your office; how many can you look at and say they were bought because they were the cheapest available?
Look into the company car park or watch the cars driving past, how many of those qualify as being the cheapest people could get their hands on?
The truth is that there are a whole range of reasons why people spend more that they absolutely have to.
In reality very few people or companies go for the cheapest option, usually they go for the best perceived value. Some of that value may come from a brand name; Mercedes, YSL, Apple, Kellogg etc. Other value choices may be around the company supplying the item and the value they add through customer service, support or reputation.
Rather than fight your competitors on price, build an effective value proposition that addresses the needs of your target customers.
Some things your customers may see as value add could include:
* A clear and unambiguous guarantee
* A promise of better service
* A better specification of product for the price
* Discount vouchers against future purchases
This is just a taster, the actual things you can do to add value will depend on the business you are in and what product or services you sell to your customers.
Kano analysis can help
Brand is something that takes time to build and can be destroyed far too quickly. Brands say something about the company and product, they can lead to an expectation. The Times v The Sun; Skoda v Lamborghini these brands tell you instantly what you are getting when you buy them, they even suggest something about the people who choose that brand.
If you want to build brand value you have to decide what that brand will stand for, just think back to The Sun & The Times if you are not sure what I mean by that. Once you have decided how your brand will convey your company's position in the market and its values you have to start building towards that goal, but that is the subject of a different article.
Once you have decided how you are going to deliver additional customer value you have to go back to your pricing and see if that is still correct or if it needs changing, usually upwards if you have created great perceived or actual value.
If you are in a highly competitive market you should not just expect your competitors to react but actually plan for it. If they are expected to follow then you can claim to be leading the market and have them prove it when they tag along in your wake.