Monday, 28 October 2013

Recognising Value - Customer Perception Change

As a child my father said to me "You know the price of everything and the value of nothing" at the time I thought he was just being stingy and not getting me what I asked for Christmas. As I grew older and entered the tough market of having my own business I realised that in consumerism this is so true. People often value items on the price tag, they think because something is "reassuringly expensive" then of course it is worth that.

There are industries where this is more true than others, art being the perfect example where price is king and the higher the price the more desirable the artwork. But with something so personal as art it is a funny business, I would much rather adorn my walls with the work of Mondo who create retro and unusual movie poster art than a Van Gogh, but if I had a Van Gogh then I would be looking to turn it over for a profit. So it no longer becomes art it is simply a commodity. Take for example the recent exploits of the famous Banksy, who sold his original art on the streets of New York for as little as $30 for the buyer to discover in fact the work was an original and worth $20k. It was an experiment in art that he performed but you can be sure that the majority of those buyers will no doubt cash that cheque by selling it and turning a profit. The buyers of that art will assume value will increase until they can in turn make a profit. 

Comics would be another example of this where people buy them, do not remove them from the packaging instead reading it on an online download, because they know the price will increase. It's a different form of investment from share ownership but works on the same principles, perception of price (not value) is key.

Price Comparison Not an exact science

Back to the high street, I often find that consumers now value the price of items based on competition, but do not understand fully the service they are being provided with. If a consumer was to purchase a t-shirt with a slogan on from Primark it would cost them less than £4, should they purchase a t-shirt with a slogan from myself they would pay three times this. Why you may ask? Well simply because freedom of choice, they can have any slogan they like and complete and utter control over it, creative freedom to make a one off item specifically for them. But what if the customer wants exactly the same as an example I have produced, does that make the process any less laborious, the labour any less intensive? No. So the price remains the same. This subtle difference in understanding of a shop is lost on many and the proliferation of multi nationals into our conscience has resulted in a mass price war. Fear not this price war because there are weapons that the little guy has much better than the big guy!

Bartering the last Bastion of the Small Guy

The art of bartering has been lost, seen by many as cheeky or awkward, but this is a weapon that most small retailers retain which their larger counterparts cannot. An employee at Tesco will not give you a discount on a TV, or a yoghurt but the local retailer might. How would you go about advertising this unique selling point? First you must ask yourself if you want to, by advertising this fact are you not simply saying "My price tags are indicative only". The best way to achieve this is by closing the sale on an individual basis, reading customers is a fine art but there are obvious signs when someone is interested in a product. If you see them about to decide against it a quick price drop may sway them into your order book. The trick is always to engage customers, by doing it this way you can clearly dictate this a special offer for them, and not an open invitation to get discounts every time. You may find this one act of generosity actually makes you turn a would be browser into a long term customer.

Price doesn't matter to everyone

In Spite of this potential price competition you may find that the reverse is also the case. Whilst many people want you to be price competitive others will value the aspects that you can provide ahead of the big guys:

- Great customer service
- Personal interaction
- Expertise
- Your brand, shop local and other initatives actively encourage people to shop with the small guys

I often see a customer paying more than I will charge, because they value the item beyond the price I am charging and they are rewarding the work and effort I have executed. A situation I am sure doesn't happen in your faceless multi nationals. This often restores my faith that not all consumers know the price of everything and the value of nothing.