THE VALUE OF MARKETING VALUE
The word "value" is one of those ridiculously overused words. Advertising overuse has made it virtually mute. The word “ value” has lost most of its value! Terms such as "the best value" and "valuable gift or coupon" become trite when they appear on every product label.
Despite what overusing the term “value” has done to its selling impact, value is still the measuring stick by which most buying decisions are made. Understanding “value” is useful in the process of carefully crafting product positioning and in comparing competing products.
Burgess group developed a model to facilitate assessing the components of value as a tool to help clients understand the how value is created and measured. This method has been used successfully for years to move management away from superficially boosting hype: selling value that is actually nonexistent. While many good (and statistically superior) models exist for evaluating consumer attitudes about value, the Burgess Value Model is an easily understood approach for probing the issue.
Value has four components: quality, price, service, and image. These four components are easily evaluated when comparing a company or products with similar and competitive products or companies. On the other hand, determining overall value is very difficult. The best way to describe how this method works is through the following example.
Compare the purchase of a “Polo” shirt from a Ralph Lauren designer store to that of an ordinary “knit-shirt” from Wal-Mart. Then, assign an approximate rating to each of the four components (quality, price, service, and image). The two similar products will probably be rated very differently.
Ralph Lauren (Polo brand)
If we chart them they might look like this:
When the points are connected, a “diamond” is formed for each store’s product. This provides a rather good visual value comparison of the two products, revealing a considerable difference between them.
In each case, both stores have a particular market. They may even make equal amounts of money on the product. They can exist side by side. Because of the image component, it is difficult to determine which is more valuable. One market’s perception is that image is valuable. Another market’s perception is that low-price is what matters. Beauty is in the eye of the beholder. In other words, value is influenced by perception. Two markets for similar products can co-exist, both having enough perceived value to be successful (perhaps even sharing some customers!).
On the other hand, when competitors are competing for the same market, value can be fashioned intentionally. I recently used this exercise to compare a client’s competition.
Their chart looked like this:
Black = Client
Blue = Competitor
With service, quality and price so similar, the differentiation between the two company’s value was in the element of image. Suddenly, everyone understood the importance maintaining consistency in all activities where the image of the company was involved.
The exact marketing positioning was deliberately raised to an increased level of importance. In this case, it became clear that projecting the wrong image might very well cause stagnation (a trend that is difficult to track, and expensive to discover after the damage is done).
Based on the outcome and level of examination, the Burgess Value Model is useful in providing understanding in a variety of areas including company image, product line, and service. This enables the precise crafting of an item’s value while prioritizing the area that needs the improvement or change. This method can be used to discover ways of building value into a product lacking a competitive edge (for example, a high-priced product).
The customer will always make buying decisions based on value. Ask yourself, “How is each of the value components perceived by my customers?”; “Is a strategic plan in place for each of the components or just one or two?" Knowing where the value lies is what is valuable in marketing!
Original Article Written in October 1997