( * - the word 'product' can be substituted to mean 'service' too; and vice versa )
Every consumer looks at maximizing value accrual while engaging in act of purchase of products* or services*. Marketing as a domain plays a very important role in influencing a purchase. This influence is aimed at convincing the consumer of the value inherent in the product or service they market. Post purchase evaluation is when the consumer evaluates in real terms the value that he/she derived from the purchase. This is when every company must score with the consumer. If it does not, the consumer moves on to a competitor's product or service. The success of a product or service lies in its ability to manage the value mix as seen by the consumer. Every company must be careful in deciphering the components of value as perceived the consumer and what is more important, is for it to understand the value component mix.
Value Mix
Every product or service when sold, delivers value from three perspectives, otherwise termed the dimensions of value, namely functional, economic and psychological. Every product or service is perceived by the consumer from these three perspectives. What is to be noted, however is that the quantum mix among the three dimensions varies from one product to another. In addition within a certain product category too, the mix varies from one brand to another. Consider the first difference in the value mix across products. All products that feature under the 'commodity' tag, tend to score heavily on the functional and the economic dimension. This is not to say that the psychological dimension is absent in commodities. Take the case of a commodity such as 'rice' bought for consumption. Do most consumers evaluate this commodity in terms of how good it is for cooking and how much they have to pay to buy a kilo? Sure they do! This is what might dictate their choice in terms of buying a certain category of rice. But is the psychological component completely absent in this purchase? Surely not. The choice of the store to buy the rice from, could be dictated by the psychological dimension that makes a buyer comfortable in a particular store. This 'comfort' could, for example be the perception of quality and customer service attached to a store, which could again be guided by the 'brand pull'. This could be one of the reasons why there is a beeline to buy groceries from branded retail outlets such as Big Bazaar and Food World ( in South India ). Though this psychological pull towards a certain store cannot be attributed, as a dimension, directly to the purchase of a certain category of rice, it certainly points to an indirect connection.
Consider the dimension quantum mix across brands in the same product category. A Reebok or a Nike shoe can sell for a sum of seven thousand rupees ( $ 160 ) in India, because the buyer in this case is evaluating the product from the psychological dimension. The quantum of this dimension in the mix ( for the branded shoe ) is high as compared to the other two. Similarly if the purchase were of the brand Bata, the dimensions that play a prominent role would be economic and functional in that order towering over the psychological dimension.
An understanding of the value mix is rather a necessity for sellers and marketers. This understanding has to be built for each market segment targeted. The design and development and the marketing of any product must be dictated by the value mix applicable to a certain segment. A flaw in this understanding can result in a faulty product design or even faulty marketing initiatives.
Functional Dimension
The functional dimension is about what a product or service does in fulfilling the utilitarian need that drives the purchase made by a certain segment. The utility provided by a product is driven primarily by product performance, ease of maintenance and servicing. More than others, products that are not differentiated and meant for the mass consumer need to deliver consistently on this dimension.
Economic Dimension
The economic dimension is the price of the product. The price for every product or service, must justify the value perceived. As a rule of thumb, for any product targeted at the niche consumer, the psychological dimension scores heavily in the value mix, and therefore will be priced on the higher side. The utilitarian value derived would be high, but would not be actively considered by the buyer during the time of purchase. The utilitarian value derived would almost be a default assumption. On the other hand any Mass Consumer product must be priced at lower or competitive rates, to provoke trial and purchase. Considering the product from a financial perspective, pricing, in most cases would be 'cost driven' for Mass Consumer products and 'market driven' for Niche Consumer products
Psychological Dimension
The psychological dimension decides the 'esteem' appeal of a product. Most of the products that lean on this dimension to influence purchase are highly differentiated with a unique selling proposition. These products use the 'positioning' tactic to create imageries that are unique and occupy a distinct position in the minds of the consumer. They are definitely brands! Whether they last long would depend on how well this positioning tactic can score with the niche consumer. If they last long, and can hold on to their position, they even become iconic.
Value Mix across categories
Goods and Services can be broadly classified into four categories, namely, Convenience, Shopping, Preference and Specialty. Each of these categories has a distinct Value mix that dictates delivery of value. For example, Convenience goods score heavily on the functional and economic dimensions whereas Speacialty scores in the psychological category. Every business firm must clearly understand the value mix as applicable to the products or services that they sell. This helps them come up with the right design of the product and the right marketing strategies to communicate the inherent value in them. This is a sure guarantee of business success.
http://www.alliancebschool.org
Every business experiences slower periods. For some, they sell more... Read More
No "meme" isn't a typo and Got Milk, the more... Read More
Building a dynamic small business is a constantly evolving, increasingly... Read More
I recently took an organizational behavior class where my professor... Read More
You have invested a lot of time and energy on... Read More
Why do so many companies languish and watch as their... Read More
The Accountability/Alignment Process: Three Steps to an Accountable Organization Generating... Read More
Canada's lean leaders need to look beyond the horizon and... Read More
One of the most powerful driving forces in human nature... Read More
To Grow (Catapult) Your Business That's Why.When it's in your... Read More
Have you been in a "brainstorming" session where each person... Read More
We all know that nothing runs without a plan, and... Read More
More than $117 billion passed hands from Internet shoppers to... Read More
Are you frustrated by the lack of growth in your... Read More
There's nothing automatic about corporate growth, particularly in the information... Read More
I am not a big fisherman, but I do enjoy... Read More
Possibly THE most frequently asked question of me is "What... Read More
As a business owner, you've likely created a hurricane plan... Read More
Human beings are rational agents. Rationality endorses one to take... Read More
If you own a mobile franchise business and wish to... Read More
From time to time there seems to be a flurry... Read More
Writing a Business Plan these days is tough, venture capitalists... Read More
If you are a successful franchise of a large franchise... Read More
Would you like to jumpstart your online or offline business... Read More
1. Attempt Succession Planning Without Other Strategic Plans. Succession plans... Read More
If you own the mid-size business and actively work in... Read More
"Bozo" ? A clown with a forlorn look, always finding... Read More
Q: A key investor in my business has suggested that... Read More
To stop a computer virus you must understand how it... Read More
Before becoming a netpreneaur, I was an entrepreneur. First, I... Read More
Business rises and falls on leadership. According to business guru,... Read More
One Research Scientist at the Hewlett-Packard (HP) Imaging Systems laboratory... Read More
You know you need a business plan. You probably realize... Read More
Every new business owner knows that a business plan is... Read More
If you are in the parking business and own or... Read More
There is a story, about a business owner who wasn't... Read More
Here's a really simple way to make sure your plans... Read More
There is so much small business information available today that... Read More
Microsoft Great Plains does wonderful ERP job for horizontal markets... Read More
No "meme" isn't a typo and Got Milk, the more... Read More
Writing a business plan is not an easy endeavor, nor... Read More
You have heard that there is extra money on the... Read More
With a heightened awareness of opportunity, ideas can often be... Read More
If you are a successful franchise of a large franchise... Read More
Cassy was an employee of a nonprofit who had been... Read More
Microsoft Great Plains fits horizontal markets clientele and in case... Read More
Business owners and entrepreneurs are, by nature, risk takers and... Read More
Is there a 'magical' way to exponentially grow your business?It's... Read More
"Begin with the end in mind," says Stephen Covey in... Read More
Business planning is widely acknowledged as one of the keys... Read More
Strategic planning is vital while starting a new business or... Read More
Mobile auto detailing equipment becomes very inexpensive around March each... Read More
The day you decide to take the plunge and work... Read More
The first task before hiring a contractor for home remodeling... Read More
Remember Chux? The disposable diaper that took the market by... Read More
1. Attempt Succession Planning Without Other Strategic Plans. Succession plans... Read More
Here is an abstract thought on studying nature and the... Read More
So you've decided to write your own business plan because... Read More
If you own a pressure washing business one of the... Read More
If you own a mobile car wash business or auto... Read More
Ask Yourself three simple questions that affect your strategy planning...... Read More
The boom of the dot-com era in 1999 brought the... Read More
Part 1A few weeks ago I attended a seminar sponsored... Read More
The time when a website was just a simple set... Read More
Succession planning, like any business acumen, is both an art... Read More
Diversify - to make diverse, give variety, to balance, to... Read More
Strategic Planning |