Brands often want customers to find value in their products or services, but just how often do customers perceive those things as beneficial?
We wanted to learn more about what customers deem as valuable during their interactions with brands, so we reached out to Dr. Paul Burke, a marketing professor at the University of Technology Sydney (UTS) Australia. We spoke about the factors necessary to create value for brands and how you can do so.
What is customer perceived value?
We have some semi-bad news: having a valuable product doesn’t guarantee that your customers will see it as such.
“A customers’ perceived value that they attach to a product or service has nothing to do with the actual value of the product or service: It’s all about the perceptions of a benefit being derived from using or experiencing that product,” Burke said. “Brands and businesses that focus on how to create that perceived benefit can expect a return in the form of more consumers choosing their product relative to a competitor.”
In this context, value is determined by what the product will do for consumers. Does it live up to its description? Has the brand proven to be credible? Will it enhance the customer experience?
The answers to questions like these have to be positive, and they must ring true. Customers are more likely to be flexible with their spending when this happens and, in turn, will appreciate the monetary value of the product.
“When talking [about] 'value,' many may think it’s about it in the context of value for money. But the price of a product is determined by two things: One, the floor price that a company can [attach to] a product based on their costs and competitive advantages in supply chains, and two, the ceiling price, the upper echelon for what consumers are willing to pay,” said Burke.
If a business can create and offer what consumers perceive as valuable, that ceiling rises and thereby creates an avenue for more profit.
How to create value for customers
So what all goes into creating value for customers?
There are two main avenues that businesses need to consider are in play.
1. Consumer rationality: Product has the right specifications, saves them time, is more convenient, is at the right price.
2. Consumer emotions: Product allows consumers to feel loved, secure and more power and prestige.
Consumers are also looking for products and brands that lessen the chances that they’ll experience something negative; they want to avoid frustrations, minimize anxiety and reduce their fears. A brand can be offering a great product for a huge discount, but if that brand is viewed by the public as untrustworthy, or fills consumers with fear, then consumers may still buy the more expensive, better branded alternative.
“The investment of brands to create value over and above the product on offer is critical. Consumers look to brands that create a promise and are perceived as being able to keep those promises,” said Burke.
Creating value starts with the four C's: content, community, curation and collaborations.
You should be focusing your attention on how your brand fits with the experiences and lifestyles of your customers. You can do this by curating content that resonates with your customers and by utilizing the brand advocates or influencers who support your company. Burke says this won’t be an easy task for any company as competitors attempt to achieve the same outcome, but building a brand requires a long-term investment that focuses on consistency over markets, products and time.
When you have a valuable product or service, you want your customers to perceive it that way. Being aware of what your customers value from a brand can provide you with insight into what strategies will work for you.
