How to create value in your marketing activities
‘The extent to which a product or service is perceived by its customer to meet his or her needs or wants, is measured by customer’s willingness to pay for it. It commonly depends more on the customer’s perception of the worth of the product than on its intrinsic value.’
That is the definition of value right there – and with that definition in mind, it is important to understand how you and your organisation are creating value for your customers. Whether you are in a B2B or B2C environment, the value of your product or service is categorized as follows:
According to Smith and Colgate’s framework, you can identify the value of your product or service in four categories. Through understanding your target market and the value your customers will derive from your product or service, your marketing activities will have the ability to connect with your customer and help them align with the value your product or service will provide.
The first part of the process is to identify your customer profile / persona, then you need to determine:
- “What are the problems that are affecting my target market?”
- “What is the impact to the customer of not having this product or service?”
- “What would the impact to the customer be if they acquire our product or service?”
Other questions we need to ask ourselves are, “How do they want to engage with us?”, and “What information do they need in order to progress through the buying process?”. Through understanding your customers and the value of your product or service. You will be able to successfully align your marketing activity and connect the outcome your product provides emotionally and / or rationally.
For example, let’s say that you work in a B2C environment and you sell education. You would most likely target the ‘symbolic / expressive value’ talking to the value of building self-worth through creating new and building on existing skills. You could also target the ‘Functional / Instrumental Value’ by identifying outcome of being job ready or attaining the next step in a career.
As a B2B example, if you are selling a technology product your marketing would want to focus heavily on the ‘functional / instrumental value’ alongside the ‘Cost / Sacrifice value’ with metrics and predictions of the efficiency and effectiveness of your product along with the confidence in change through partnership with an expert to reduce risk in implementation.
In any marketing activity, it is important to remember the customer’s buying decision and how they identify with your product or service is based more on the intrinsic value they will derive than on the features and benefits and its intrinsic worth. As the great man Warren Buffet said, “Price is what you pay, value is what you get.”
Source: Smith and Colgate (2007) customer Value creation: a practical framework, Journal of marketing theory and practice, vol 15, no. 1, pp 7-23