What influences consumer perception of value?
It’s often said that one man’s junk is another man’s treasure, such is the perception of value in product development and marketing. So many factors influence our perceptions and they can change over time and alter consumer behaviour. Vouchercloud’s recent “Perception of Values” data graphic delves into this further, looking at the psychology behind our perception of value and examines trends, marketing practices, different generation’s attitudes towards value and other factors. Some of the specific areas that the data covers are:
Lobster’s journey from prison food to fine dining
In the 17th century lobster was a staple of the prisoner diet. Moving into the 18th century supply remained high and the food was considered a dish of the poor and lower classes. It wasn’t until the 19th century that lobster started to become a delicacy.
At one point even used as cat food and it was then rebranded by enterprising rail workers and sold in dining cars on trains far from the coast where supply was significantly lower. In the early part of the 20th Century overfishing followed by new conservation laws meant the price of lobster started to rise. 2012 saw an 18% rise in the price of lobster and as of 2014 the cost was roughly $7.95/lb. The example clearly shows that emphasising the scarcity of a product and changing the setting in which it is served can impact on people’s perception of value.
The new sound of value
The digital era has had an impact on many industries, not least the music business which has seen total industry sales fall from $20bn in 1999 to just $5bn today as fewer people buy physical albums. The introduction of iTunes, file sharing sites such as Napster and Kazaaa, alongside streaming platforms like YouTube and Spotify have resulted in more people buying singles or listening on non-payment platforms.
Digital Natives, the term used to describe those people brought up in this environment have a lower value perception of music than Digital Immigrants, the people brought up in previous eras. Incredibly sales of Vinyl rose by 38% in 2014 as more music fans seem to regard the idea of an album, complete with artist’s artwork, more highly than that of a CD.
Why are we willing to pay more?
The top five common influencing factors for people paying more for the same product include ease of purchase, product arriving quickly, lower cost of ownership, providing the buyer with prestige and as a result of friendly customer service. Social responsibility of the vendor also has an impact on sales. For example 50% of purchasers between the ages of 40 and 44 are willing to pay more for products from socially responsible companies. Brand plays its part too as consumers tend to rate products from more recognisable brands as higher quality.
Exotic is impressive
One interesting test highlighted in the data graphic uses consumer perception around names, particularly with products that sound exotic. Consumers were provided the same wine in several glasses, giving each glass a different name, and then asked about the taste. The most exotic sounding name received the highest rating, inspired the greatest buying intentions and led to most people saying they’d pay a higher price for that wine.
How price affects perception
Finally of course price is one of the major contributing factors to our perception of value. Perceptions of price positively influence perceptions of quality for a product, and inversely influence perceptions of value. However it’s important that prices are set at the right level; too high and it’s a rip off but too low it becomes cheap. Once again the same wine given to the same people in 2 glasses where one is said to cost $5 and one $45 delivers results showing people perceive the more expensive wine to be nicer. Most of us are aware also that people are attracted to price points containing the number 9 but did you know that these ‘Charm Prices’ actually help to increase sales of product by up to 24%?
A great quote to summarise our perception of value comes from writer and entrepreneur Charlie Gilkey who wrote, "People don't buy products because of the actual value of the products - they buy stuff because the price of the product closely matches their perceived value of the product."
Jeanna Heeraman is a digital marketing executive at vouchercloud.com