Perception of Value: What It Means For Marketers To Generate Sales?:
Businesses and marketers struggle with how to create products that have a high perceived value and drive sales. We’ve all been there before. You try to buy something, but you can’t justify the price tag. Or maybe you buy something because it seems cheaper than what you were paying for before. But then, the product doesn’t live up to your expectations, and you regret your purchase decision. In this post, we will explore the various forms of perceived value, why it matters to marketers, and how they can use it in their marketing strategies.
What Is Perceived Value?:
Perceived value is an individual’s judgment about the worth of a product or service. It's subjective and can be influenced by drastic factors, such as price. Value is often a relative term. One person may find the price of something valuable, while another might judge it to be overpriced. Even though two people could have opposing opinions, they would both be correct in their own right.
Perceived value is also influenced by how much we think we are getting for our money. For example, if you buy a $5 item from the store and you feel like you got your money’s worth, then that item has a high perceived value. However, if you buy a $500 desktop PC and think it was too expensive for what you received, then that product has low perceived value for you despite its actual physical cost. So, what is the perceived value? It's the relative worth of something in the mind of the customer.
Why Does Perceived Value Matter To Marketers?:
Marketers often struggle with how to create products that have a high perceived value and drive sales. Pricing is one of the main tactics they use to increase the value of their product. But if you're not careful, customers can see right through your pricing strategy, and it won't be as effective.
For example, let's say you're trying to sell a $100 women's jacket. You could price it at $100 or you could price it at $150 with the intention of promoting a "sale" that never actually ends. However, if someone looks at both prices, they'll think the cheaper option is clearly the better deal.
Or let's say you're selling a publishing service for $1,000. If you want to add perceived value to this service, try advertising it for $3,000 instead, even though it costs the same amount in reality as before. When people see $3,000 instead of $1,000 on an ad or website page, they'll perceive that your service is worth more money than if you had advertised it at its true value. They may not know why your service should cost more than what they would pay otherwise, but just changing the price tag on an ad or website page from $1,000 to $3,000 suddenly makes them want to purchase your publication service without knowing why or how much work goes into creating it, unlike their other cheaper options.
How Can Marketers Use Perceived Value In Their Marketing Strategies?:
It may be a surprise for marketers to find out that their product is not the most “expensive” or the most “cheap”. People don’t actually buy products because they are expensive or cheap; they buy products because they think they have value.
People will spend more money on a product if they think it has a higher perceived value than one with a lower perceived value. It may seem counterintuitive, but it is true. But first, let’s explore what this means. Perceived value is the customer's assessment of how much benefit and satisfaction he or she anticipates from a given purchase relative to its price.
Imagine you are looking for a new desktop PC and you're comparing two different PCs that both meet your needs: one costs $400 and the other costs $800. Which one do you think has the higher perceived value? You would probably say the more expensive laptop because it was better quality and had more features than the cheaper laptop. Now imagine that same scenario, but this time the $400 laptop had two-year accidental damage protection while the $800 laptop only had one-year accidental damage protection. Would you still say that the more expensive laptop had more perceived value? Possibly, but it depends on whether or not you need two years of accidental damage coverage.
The takeaway here is that price does not dictate whether a product has high perceived value or low perceived value; customer perception does! Marketing can affect your customer's perceptions by showing how your product is better than the competition, or how it will provide them with greater benefits and satisfaction.
The formula for a perceived value is:
Perceived value = (benefits received) – (price paid).
High perceived value means that your customer perceives that they are receiving a lot of benefits relative to the price they paid, while low perceived value means the opposite.
When it comes to marketing, a product's value is largely determined by the customer. The best way to determine how to market your product is to understand how potential customers perceive it. So, what is the perceived value? It's the relative worth of something in the mind of the customer.
The perceived value affects marketers because they need to know what potential customers value in order to entice them to purchase a product. Marketers can use this advantage by researching how potential customers feel about a product or brand and marketing accordingly to generate more leads and sales.
All the best....
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