Value is something that is perceived. It is not a product feature or physical thing and it happens in the mind of the prospect or customer. This makes it hard to plan for. However, the companies listed in the aforementioned article have done this. This part of the article series will focus on how these value brands have positioned themselves in the minds of their prospects and customers in a way that maximizes value perception.
A review of positioning
I annoy my wife with a game I call “Will they make it?” We play it when we are driving around town. The objective of the game is to spot a new or old business and discern whether that business will make it or not. Judgments are based on previous knowledge, location, facilities, outdoor signage, anecdotal evidence, and so forth. If we deem that a particular business will not make it, we have to give our best guess as to how long it will take that business to die.
We have been wrong and right with our predictions, but the fundamental question we try to answer is: What does (insert business name) mean?
This is the fundamental question of positioning: What does your company mean?
The meaning of your company is the culmination of what you produce and how you spread the message of what you produce. The meaning of your company in the minds of your prospects and customers is your position.
The value position
What does Walmart mean? Cheap and crappy. What does Target mean? Cheap but good. What does KMart mean? Not as cheap, but just as crappy as Walmart.
Value is a perception. Most of the time it is based in logic, but other times it is not. For example, Walmart and Target are both listed as top value brands, but Target is clearly the better value in my eyes. You pay marginally more for Target , but get a lot more quality and, dare I say it, prestige.
The best value happens when the customer finds what they are looking for and get what they expected. For example, if I need cheap ice trays and I do not care about how long they will last — I can find them at Walmart. I pay 50 cents for an expected lifespan of 1-2 months — I am happy– I go by more cheap ice trays after 1-2 months. If I tried to find these ice trays at Target the price would be slightly higher, perhaps one dollar higher (yikes), and the trays would last longer — but that isn’t what I was looking for even though my performance expectations will more than likely be satisfied — the value of Target goes down and the value of Walmart goes up once I see 50 cent ice trays at Walmart.
Value is tricky because it is not just about price, quality, convenience, or a balance between all three. It is about your prospects finding what they need and getting what they expected.
Value is not a matter or being cheap. Ask a Porsche owner if they thing their car is a good value. The research done for the article in questions does not address this. The brands listed sel relatively cheap things.
Putting the value position to work
The first thing you need is to find a target market that has empty space in the value position. This is hard to do. Think about it, what producer does not want to occupy the value position within a respective target market. It can be done.
If this cannot be done, get creative — but keep it real. Don’t try to add value to things that people do not actually need — these types of products make it on to late night infommercials. Think hard about businesses that have taken or created a value position by being creative. Southwest, for example, was not the first airline to offer cheap flights, but the benefit of their product is specifically for regional air travel. Target is another example. By all accounts Walmart should be putting Target out of business, but Target altered their value position ever so slightly to increase value perception with people to snobby to shop at Walmart.
In the end
The value position is not the only position a business can occupy. Rolls-Royce and Louis Vitton worried about the value position? No.
The right position plays on a combination of the benefits of your products, your target market, and your core competencies.
The second thing you need in order to make the value position work for your business is product offering or product line that value can be derived from. If you sell crap and it is priced wrong — you can unsuccessfully occupy the value position all day.