Value is an interesting word that has a major impact on how consumers behave when it comes to making a purchasing decision. We all need to be fully aware consumers can and do change their value perception on an ongoing basis.
I was reading recently about brands that appealed to the young a few years ago no longer have the same appeal for the young consumers of today. Apparently brands such as GAP, Dell, Red Bull and Abercrombie and Fitch have lost their appeal and no longer have the same enhanced consumer value they commanded a few years ago.
Recently there have been several negative Press reports about British Airways resulting from aircraft malfunctions, IT failures and reports of substandard food being served to premium class passengers. All these negative media reports impact the brand during this centenary year for the airline. A few years ago, the airline was branded as ‘the worlds favourite airline’ but today they are at number 19 in the SKYTRAX passenger ratings survey. This is good news as they were at 31 last year.
Value has a mysterious influence when it comes to certain products with little or no difference. In recent years there has been an explosive growth in demand for bottled water. Aquafina produced by Pepsi is the number one bottled water brand. The water is taken from the neighbouring municipal water supply before going through the purification process which includes reverse osmosis, ozone sterilisation and ultraviolet before being despatched.
Aquafina is a middle-priced water brand while own label brands dominate the lower priced end of the segment. In the UK five premium water brands – Highland Spring, Evian, Buxton, Nestlé Pure Life and Volvic – are collectively responsible for 30 per cent of total bottled water drinks sales. Close to my home in Scotland is the Highland Springs facility, owned by billionaire UAE businessman Mahdi Al Tajir, the number one selling bottled water in the UK. They have sales of £110 million and profits close to £5m. Profits have declined since the company became the first UK water brand to introduce a 100pc recycled bottle in a bid to cut ocean pollution.
Water is not alone with large price variations for something that tastes much the same from the lowest priced product to the highest priced product. Salt is another product that has large price variations that depend upon consumer perceptions of value.
All this I hope helps to demonstrate the importance of creating consumer value but also how fickle consumers can be when it comes to valuing a brand. Understanding why something as basic as water can have large pricing premiums and why consumers are prepared to pay for products they consider are good value for money is important.
I spent many years in the baking and dairy industries working for companies that managed to secure customer loyalty not through cheap prices but through a sound value proposition. My experiences in the bread and dairy businesses taught me the importance of retaining and building the consumer value proposition. There is no ‘silver bullet’ to share with you but I do know great leadership, great teams and great products consistently delivered beats cheap prices every time.
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