When did “value” start to mean “cheap”?
The A&W “value” commercial is driving me crazy! Don’t get me wrong; I admire A&W for way it is seeking to re-position its brand (and doing a pretty good job of it, too) but when did “value” become synonymous with “cheap”?!?
In truth, value is a personal assessment. Consumers – B2B and B2C – consider all the benefits they will derive from a certain brand’s product and weigh that against the total cost of ownership… and then decide if the product or service offering represents good value or not.
People will also use their own personal cost-benefit scale to weigh the relative merits of multiple brands before making a decision in favour of your brand, or someone else’s. If there are multiple ways of solving their problem, or fulfilling their need, they may also consider products and services outside of your category.
It’s about which brand is best for them at a price that fits within their budget… for that particular purpose and that point in time.
Consider booking a massage appointment (which sounds like a wonderful thing to me, right now). You have two choices:
1) A $60 1-hour massage at your gym. The upside: Parking is free, it’s conveniently-located and the RMT does a wonderful job; she really knows how to get the knots out. The downside: You have to walk up a long flight of stairs from the change room in your street clothes to get to the sterile-looking treatment room with fluorescent overhead lighting. The room is located near the daycare centre, so shrieks can be heard above the music from time-to-time during the massage.
2) A $100 1-hour massage at a downtown spa. The upside: You are pampered from the moment you arrive. You get to have a steam and time in the hot tub before donning a big, warm, fluffy robe and slippers and making your way to the tranquility room where you are served herbal tea and cookies while waiting in a recliner for your therapist. The candle-lit treatment room is gorgeous and your highly-skilled RMT uses aromatherapy oils. The downside: It takes 45-minutes to get downtown on a Saturday, parking near the spa is $20 and you are expected to tip the RMT. Total “cost of ownership”, including the gas: $150.
The gym massage is great and may be your most frequent choice, but despite the price difference, there will be times when you simply have to have the downtown experience. On those days, the $150 massage represents better value to you.
Clearly, value is highly subjective. That is why we use the phrase “perceived value”. Equally clear is that you don’t have to offer the lowest price to be perceived as representing the best value overall.
When companies get three or more quotes, rarely does the lowest quote win the bid. Even in an RFP/ tendering situation…
• the merits of the overall response from all submissions are considered,
• the true contenders are identified,
• then – once the playing field has been levelled in the minds of the RFP issuer – and only then, price is considered.
My advice to those in charge of setting prices: Stop thinking that you have to have the lowest price in town. Instead, get your marketing department or advisors or help you determine how to offer the best value. That approach will build both your brand and your bottom line.
If you would like to chat about ways your company or product can offer better value, please feel free to contact me. In the meantime, remember to have fun and be prepared to “go out on a limb because that is where the fruit is.”