My go to marketing guru, Albert Einstein said: ‘Energy cannot be created or destroyed, it can only be changed from one form to another, and relocated’. This has become known as the first rule of thermodynamics.
Perhaps ‘Value’ has a similar characteristic?
Recently I needed to buy a pair of sunglasses. I wanted polarised ones, that sat on my nose easily, and did not look ‘dorky,’ whatever dorky is. I went to a specialist sunglasses retailer in a shopping centre near where I live. The cheapest that met my very broad specifications was over $150. Too much, so I went into a pharmacy a few doors away that had sunglasses, and bought a perfectly good pair of polarised, non dorky glasses for $30.
My instinctive reaction was that the specialist retailer was a rip off merchant, but on reflection, he was not catering to mean old buggars like me, he was catering to the young hip crowd, who saw value in the brand name, and fancy curving design. There was value for them in the extra $120, the value of being seen in an expensive pair of sunnies, the feeling it gave them of being able to pay that much for something to sit on next week,
The value was not counted in the dollars, it was in another set of forms, ones I did not value in this instance.
There is some sort of scale in our heads that measures ‘value’ to us, which will differ for each individual, and set of circumstances. The scale goes from the pure utility derived from the product, to an entirely emotive response.
The specialist retailer was not selling just sunnies, they were selling a feeling, and a sales experience, the street cred that comes from an expensive brand. The sense of ‘value’, whatever it may be made up of, makes the extra $120 for some, a good investment. That feeling comes from the context of the sale in the specialist retailer, combined with the investment made by the brand owners in building their own ‘brand story’.
In every purchase there is a trade-off between pure utility, and the price paid. The point of intersection is the value a buyer sees in that purchase at that time. A brand is the carrier of that value.
The pharmacist who got my money was just supplying me with the utility of sunnies. I wanted only to keep the glare of the sun out of my eyes, branding added no emotional value at that time, the value to me was entirely in the utility.
