Bonnie McCoy will be speaking at the C&I Industry Symposium on 19-20 October at the ICC Sydney. Tickets are available here.
Bonnie McCoy, General Manager at Customology, explains why understanding how a customer perceives value is critical for a brand to appropriately engage their desired audience.
Earlier this year, Customology produced The Unspoken Customer, a piece of research that surveyed 2500 Australian consumers to find out what they think about brands, their loyalty to them and their gripes with them.
Not surprisingly, our research found customers were strongly influenced by economic uncertainty with 90 per cent reporting they were more conscious of spending decisions in the current climate. With customers becoming more price sensitive it’s tempting for brands to respond with discounts and other price signals. However, this can quickly become a race to the bottom that some brands won’t survive.
Most brands would rather talk about value than price. Elevating the conversation with customers in this way opens the door to brand differentiation and premium pricing. But what does value really mean from a customer’s perspective? We developed a Customer Value Matrix that brings together six important drivers of perceived value that brands should consider. Three of which I explain below.
The traditional functional view of value of a product or service can be defined as the price over the quality. This is well understood by consumers, the higher the price of a product the higher the perceived quality and therefore the lower the price, the lower the perceived quality. High quality and low price is hard to sell to a lot of consumers. We recommend that brands think beyond the functional definition of value in their branding and marketing.
Experiential value is defined by delight and convenience. During the experience of purchase and usage of your product or service did you delight your customer and was the experience convenient? Many brands play in the convenience space, but you can emphasise convenience by focusing marketing on elements that also delight your customers. A standout example of experiential value led branding the Domino’s pizza delivery drone which is a fun and very out there campaign that emphasised their commitment to convenience while being undeniably delightful (even if it was a bit of a publicity stunt).
Social value is defined by impact and belonging. Consumers are savvy and will consider what impact their purchases have on the environment or the local community. Our research found 82 per cent of customers thought it was important for brands to give back to the community and more than 50 per cent said it would directly influence how loyal they were to a brand.
Social belonging is whether your brand or product gives your customers a sense of belonging within a community that is bigger than the product itself. Red Bull has done an excellent job of supporting and building a community of extreme athletes. This branding sets them apart from other energy drink brands who don’t create that sense of social belonging.
Brands can use the value equation to highlight the key values of their products and services in campaigns that appeal to different segments of the population. If you’d like to read the full report, click here.
This article was originally published in the August/September issue of Convenience and Impulse Retailing magazine.