What value equation wins with you?
“Value is about the totality of the experience: what you get for your money, not just how cheap it is. I think we all know that intuitively.” –Ron Shaich, CEO of Panera Breand
There has been a lot of talk about value and value equations lately. Blog posts & business articles around winning the value game with consumers are everywhere at the moment…needless to say the “V-word” is on my mind tonight.
When times are tough, winning the consumer value equation gets complicated. As everyone begins to panic, price begins to hog all of the press as the bad news starts flowing in. For example, in a recent shopping survey, TNS found that consumers are shifting to lower-cost shops, with an increase in the number of people in the survey’s highest income levels saying they would use coupons and buy cheaper “own label” products. In Value Trend Tests Brand Loyalty, the Financial Times has a good breakdown of this TNS survey.
Equations always have more than 1 variable though, right?
But, as we all know, value can mean different things to different people. Even during tough times, people still think beyond price when buying products. TNS reports that healthy foods and convenience products have not been affected as much during the downturn. And, encouragingly, sales of premium priced environmentally friendly cleaning products are also not taking as much of a beating according to the FT article. Enviro-cleaning leader Seventh Generation, for example, expects sales of its products to rise about 25 percent this year. In the FT article, Jeffrey Hollender (CEO of Seventh Generation) argues that ethical and environmental values are finally starting to resonate with consumers. Hollender says, “you are starting to see, and this is unprecedented in my lifetime, a questioning of what really matters – what are you going to hold on to and what are you going to let go of?
Performance, convenience and strong brand equities all play a role in a person´s value mindset. Brands that cannot communicate that they are providing great value face the cold, hard reality of being gobbled up in a tsunami of competition.
It is easy to build a decent product and then discount, discount, discount when times are tough…but, what will people think about your product when good times are here again?
Check out Steve´s related article for more info.