In today’s competitive marketplace, perceived value is key to setting your product or service apart from the rest. It is how customers evaluate the merits of what you offer and whether it meets their needs and expectations compared to similar offerings.
Key Takeaways
- Perceived value is the customer’s appraisal of a product’s benefits and worth, especially in comparison to competitors.
- It’s gauged by the price the market is willing to pay for your offering.
- Marketing plays a crucial role in influencing perceived value, spotlighting attributes like design, accessibility, and convenience to create a superior product image.
Understanding Perceived Value
The concept of perceived value heavily influences the price people are willing to pay. A seemingly simple snap decision made in a shopping aisle involves an internal assessment of a product’s capability to meet a specific need and deliver satisfaction when compared to competitors.
The pricing strategy for your product should incorporate this perceived value. In many cases, the emotional appeal of a product could outweigh its actual production cost. For instance, it’s common for consumers to perceive greater value from attractive packaging or effective advertising.
Types of Perceived Utility Value
To amplify perceived value, you must define your product’s key attributes based on its utility or the additional benefits it offers. Companies commonly craft marketing campaigns to portray these five types of utility:
- Form Utility: This focuses on the aesthetic design of a product. Even a mundane item like a frying pan can see a boost in sales if designed appealingly.
- Task Utility: Highlights services that save the customer time, effort, or money, such as car detailing or laundry service.
- Time Utility: Availability of your product when the customer desires it; for instance, offering 24-hour services as opposed to limited 9-5 hours.
- Place Utility: The convenient location of your service, such as fast-food outlets situated close to residential areas, as against remote restaurants.
- Possession Utility: Simplicity and ease of purchasing your product through options like online orders and home deliveries, making it accessible when needed.
Special Considerations of Perceived Value
A strong brand projects certain expectations related to its products or services. Established brands can command higher prices purely based on these expectations. For example, Advil and Motrin, both containing ibuprofen, are priced higher than generic equivalents due to their brand value.
Luxury items push perceived value to another echelon by adding an element of prestige. For luxury goods, the perceived value stems less from utility and more from the status they confer. Owning a Rolex watch symbolizes accomplishment and sophistication far more than telling time does.
At the other end, some brands are marketed for their intelligent pricing. Here, the perceived value can be tied to competitive pricing yet satisfactory quality, attracting budget-conscious customers.
Related Terms: customer value, brand equity, pricing strategy, customer satisfaction.
