The story of product value perception
The product value perception? You can increase the perceived value of the product without increasing its actual value (the cost to make the product). Your mission is just to change the customer’s perception.
The story of product value perception
I was sitting on a bench by the bank of Hoan Kiem Lake when two young girls approached with some leaves in their hands. With politeness, one girl said:
– Can you spare me a few minutes?
Since I was free to sit and play by the lake while waiting for my daughter, who was studying to draw, I immediately agreed. That girl held out a leaf in front of me and said:
– How much money would you be willing to pay to buy this leaf?
I was really curious and didn’t seem to understand. Immediately, a small white girl standing next to her continued to speak
– We are students in a training course on entrepreneurship. Today our exercise is to sell leaves and the hardest thing is how to convince customers to buy that leaf.
Holding the mother-of-pearl leaf in my hand, I turned to ask:
– In your opinion, how valuable is this card, I will buy it?
The little girl immediately replied:
– Yes, in fact, a few days ago, we had to sell lemonade around West Lake, it was also very hard, but it was an exercise that we had to practice. Anyway, the lemonade cup is really a product and we don’t have a hard time selling it. But this card has no value. So we find it really hard to sell.
– So have you sold any leaves yet? – I ask
– Not yet.
– If you want to sell the leaf easier, you need to bring value to it. How do you think you can add value to this card? Like shaping, drawing, or something for it? – I explained.
– Your idea is very good. Or I can write a few words here.
The girl cheerfully took out a ballpoint pen and began to write. After receiving the leaf with some words in my hand, I happily took some money to pay the 2 girls with all my heart. They thanked me for being their customer.
– What do you think a leaf is worth?
– Would someone come to you and sell you a leaf you bought?
– What is the value when you impose it on a product?
Perception of the value of a product
You see, selling the leaf alone doesn’t bring any emotion to the buyer, but if the seller knows how to add value to it, the buyer is always happy to pay for it. In this article I will share with you how to increase the value of a product without increasing its original value.
In fact, perceptions of value are never the same, even what you think the product’s value should be.
What is value perception?
According to the dictionary definition BusinessDictionary.com :
Perceived value is a customer’s view of the product’s value to them. It has little to do with market value and depends on the product’s ability to satisfy customer needs.
Reality and Perception of product value
The same product can mean different things to different people, and the perception of the value of that product is not nearly absolute, at least for any product that is sold (hence the cost). absolute costs associated with the production of that product only).
Let’s say that perceived value is the overall evaluation of the customer’s use of the product based on what they receive. This shows that the hidden value in there is more than the quality issue.
As a result, we have the opportunity to influence customers on how they perceive the value of our products as well as to optimize the customer experience in a way that makes the customer truly happy and we still optimize the customer experience. maximize profits.
At least in this article, we will understand the perception of Product Value including product characteristics at a much higher level of abstraction, such as comfort, sense of security, high service. level, and much more.
Elasticity of Perceived Value (and Product Price)
You can increase the perceived value of the product without increasing its actual value (the cost to make the product). Your mission is just to change the customer’s perception.
There are many real world examples in this world. For example a few cases:
- Painkiller research shows that pain relievers are actually more effective at reducing pain. In fact, they are all pills of the same absolute quality, but we all have the perception that one is better than the other.
- Everyone thinks that washing the car will make the car easier to drive.
- This article is about the absurdity of valuing free things. Many people spend hours waiting in line to receive the cake (valued at 3US$), which is really absurd, but a lot of people do.
- Too many options can actually reduce sales.
The bottom line here is that there are so many little twists and turns that can change our behavior. It’s not all about rational thoughts about costs versus benefits.
Rory Sutherland said in a TedTalk talk:
“We cannot distinguish the quality of the food and the environment in which we eat it.” It’s like when you walk into a pho restaurant if you notice there is a lot of musty smell, and there are tissues on the floor. But many times you do not pay attention to this and still enjoy a delicious bowl of pho.
All of us have noticed this phenomenon, that is, when the car is clean, when driving, you always feel a lot easier to drive.
And what is the reason for this? It’s only when you’re changing the oil or servicing the car that it really feels different to drive. But you are not fully aware of it because our perception is always flawed.”
And because value isn’t just based on economic units, you’ll definitely want to try considering value-based pricing.
So how will you price the product?
The simplest way, you should price the product according to the customer’s ability to pay. Use perceived value as a measure against actual costs. There are many ways to calculate the optimal price and an A/B method can be used as well.
One of the popular and effective ways to increase perceived value is Advertising. It’s mostly brand advertising. Similarly, public relations also plays a significant role in controlling and influencing customers’ perception of products/brands.
The power of Reframing in creating product value
Transliteration has a remarkable power to change the way you see and perceive an issue. During the presentation, Rory Sutherland also gave some context switching examples:
“When you go to a crowded wine party, you get up, step out into the corner, stand alone by the window and think. The problem is that if you just stand still and look out the window, you will probably think that you are a fool, few friends, unsociable.
If you are standing alone and looking far away at the window with a cigarette in your hand, it feels like you are a musing philosopher.
So the power of transliteration is unpredictable. We all see the same thing, the same situation, the same action, but one action makes us feel great and the other with little change makes us feel very very bad.
Transliteration is one of the very popular techniques in NLP (Neuro – Linguistic Programming). Because the power of transliteration has such a great impact on the human subconscious, it is used a lot in advertising and pricing strategies.
Indeed, price transliteration is a great way to change the perceived value of a product. This is very effective in advertisements, where they do not need to change the perception of quality, but the translation of price can reduce the perception of price.
For example, you join an English club, the joining fee is 50,000VND they may advertise as:
A fee of 50,000VND vs A small fee of 50,000VND
Which one do you think is more effective? Definitely the latter.
Two researchers Hossain and Morgan research on selling on Ebay. They sell CDs, and they analyze different valuation scenarios.
Some articles sell very low prices and have shipping (eg $0.01 with $3.99 shipping)
Some articles sell for as high as $4.00 with no shipping fees.
Finally, articles with low selling prices (with shipping) attract more buyers and increase sales.)
Another Clark and Ward example of how you would price is below:
Selling at $18 including shipping will be harder to sell than $15 plus $2.99 shipping.
There are many ways to translate price. I will have a separate post about this in another post.
Why can a more expensive wine taste better?
Similar to the translation of prices and advertising above, people’s evaluation of alcohol is also very subjective.
There are many studies showing that even alcohol experts fail to recognize expensive and cheap alcohol in blind tests. That’s it.
In addition, our perception of value always increases as the price of wine varies and it also affects the taste of the wine.
Researchers at the California Institute of Technology say that if a person is given two different wines — one for $5 and the other for $45 (but in fact the same wine) — immediately their brains we become more relaxed and flexible when the taster is thinking they are drinking expensive wine.
In short, you can increase the perception of value of the product you are selling without increasing the cost of producing it. This has the obvious benefit of helping you make more money. Besides, customers feel completely comfortable after they buy the product (and they will also become loyal customers when they have a high perception of the value of the product they buy).
Of course, what I write here are just a few ways you can use to increase the value of your product. There are countless other ways on the internet that can be written into a book. But these are all very common and easily effective.
So in short, when you sell your product to someone, how will you price or put a value on that product? Every product has a higher value than it actually is but not everyone knows. That’s how I have helped lots of business owners increase their revenue through this business strategy.
How about you?