Value Framing – What do you want shoppers to compare you to?
We like to think we are all rational beings. That we weigh up pros and cons and make considered choices. Economic theory used to tell us this was the case. However, the new science of behavioural economics tells us something different. The decisions we make are hugely influenced by the environment around us and the way choices are presented.
For instance, rationally the value of a 500ml bottle of water is the same wherever you are. Yet, we pay very different prices. It could be £3+ in a restaurant, £1 in a convenience store, 40p in a supermarket, even less than 10p per 500ml if you buy a larger bottle. Price perception is relative not absolute. Is £5 for product X good value? The answer is not “yes” or “no”. The answer is…, “it depends”. It depends on how that £5 product is framed. What are shoppers comparing it to?
So, if value perception is relative, there must be things we can do to influence it, and drive purchase behaviour, without changing the actual price.
How have we seen this being done…?
One of the biggest areas has been in meals. The more you can be compared to a restaurant or take away, the better value you look in a supermarket. ‘Dine in for £10’ is not only offering shoppers a good solution at a decent price point, it is implicitly comparing to a restaurant, just by using the word ‘Dine’. Do you prefer to spend £10 or £40+ to dine?
Individual brands have been doing something similar. Compared to other ready meals, Bighams are expensive. But compared to a takeway or meal out, they are great value. The proposition ‘Perfect for Two’ and the supporting imagery on pack all suggest the value comparison is a meal out, not other ready meals.
Recently, a retailer gave a brand leader half the space on a secondary shelf, and kept the other half for the own label equivalent. Sales uplifts were much higher for the own label product. Why? The price differential between the two products was dramatised. If you look similar and cost a third less, you look pretty good value. The brand was acting as a ‘decoy’ product.
Decoy products are used in many industries. Restaurants use them on menu’s and wine lists all the time. Apple sell Ipads with four different capacities from 16GB to 128GB. Most people don’t need or want 128GB, but its existence might get them to buy the 64GB rather than the 32GB one.
It is worth asking yourself, what is your decoy product? What is the product (competitor or in your own range) that helps you sell more of what you really want to sell? The more you frame this choice in the shoppers mind, and the closer you can be to that product on shelf, the more likely you are to influence the purchase decision.
So, your value strategy isn’t just about absolute £’s and % discounts, it is relative. If you know what you want to be compared against, and frame that choice well, you can sell a lot more.
Have a good weekend and speak to you next week.