The Value Scales

Are you loading the value scales in your favour?

Think about a traditional set of weighing scales.  The design is all about balance and counter balance. The weight on one side of the scale is set against the weight on the other side.  The relationship between the 2 weights determines in which way the scales tilt.  Change the weight on either side and you change the position of the scales.  Unfortunately, the modern world has made items like this pretty redundant.  However, we think the basic concept of balance and counterbalance is alive and kicking.

The concept is at the heart of value for money decisions.  Every purchase decision we make is about weighing up cost against benefits.  If we are happy with the balance between the two we think something is good value for money.

In recent years our industry has focused much attention on the cost side of the scales, through lower prices or increasing the amount and depth of promotions.  We have trained shoppers to focus on that side of the scale.  If you tell shoppers to make choices based on price, then they generally will.

A lot of purchase decisions now, are not about which is the best product, but which product is on deal. If the average price paid in a category or in the market declines, then you need to shift more volume in order to compensate.  And shifting more volume is difficult.  As a result the market, and many categories, are struggling for growth.

However, what if we paid more attention to the benefits side of the scales?  What if we gave shoppers a reason to trade up to better products or a reason to pay closer to base price for existing products?  Would this work for growth rather than against it?

So, how can we do this?

There are 4 types of benefits we can focus on.  Which of these are most relevant will depend on the category or brand.

Firstly, there is Performance or Quality.  Does the product clean better?  Does it taste better? Does it protect better?  Having the best performance on the most important driver of product choice in a category is crucial.  This is why there has been so much focus on fragrance in fabric conditioners recently.  Win in fragrance and you win in the category.  Have a better fragrance and shoppers will pay more.

Secondly, is Health.  This is really about maximising positive health benefits.  Does the product deliver 2 of your 5 a day?  Does it deliver more protein or Omega 3?  Does it reduce cholesterol? Shoppers will pay more for what is in the product not what is taken out.  Diet Coke doesn’t cost more than Red Coke.

Thirdly, is Convenience.  In all areas of life we are prepared to pay more for things that make our lives easier or save us time.  We think a lot of innovation in the future will be about new formats of existing products – simple product tweaks that can add a lot of value.  For instance, you can probably sell one carrot for about 10p.  Chop it in Batons and you can probably charge 40p. Put it in a convenient pack format with some Hummus and it’s £1+.

Fourthly, is Meaning.  This is less tangible, but no less important.  What is the role your product plays, or could play, in people’s lives?  Is it about getting families together around the dinner table?  Is it about giving people confidence, making them feel better?  And how does the shopper feel about being seen to buy your product?  What do they think it says about them?  Whatever the meaning is, can you own it better than the competition?

We all want sustainable business and category growth.  However, if we focus too much on the cost side of the scales, we may find growth hard to come by.  Focusing a bit more on the benefits side can work for value and growth.   It’s not easy, but the prize might just be worth it.

So, which side of the scales are you paying most attention to?  And do you need to rebalance?

On a separate note, we are really pleased to have been asked to write a monthly article for ‘The Grocer’ magazine.  Our first article goes out tomorrow.  You can find it in the ‘Comment & Opinion’ section.  We will also have a link to it on our website www.insight-traction.com .

Have a great weekend and speak to you next week.

© 2020 by Insight Traction