Value Up! Eliminating Value Confusion – (Part 2)

By Sid Raisch

In the first part of this article we discussed why the word “value” is easily misunderstood, and how this misunderstanding confuses our people. CLICK HERE to read it.

Now that we've cleared up the definition of value, let's use the word in its highest value. The best way to do this will be to get clear on the levels of value.

The Low Road to Lower Value

In the macro-economic, mass market there can be a greater economic benefit (profit volume, not percent) of providing goods of perceived lesser value at a lesser value price. So, if you own or are employed by a mass market retailer or producer by all means continue to drive down value and squeeze the last penny of margin and profit that commoditization can squeeze out of your products. You'll make it up on the volume, for a while. Competition is intense in this arena where everyone is trying to lower costs to maintain margins without price increases. Eventually, someone lowers their price a little bit too close to the edge of margin, and the others drop in volume more than they can afford. Losing by a small margin means losing everything when multiplied by great volume. There is one possible escape to this and that is to reinvent or reposition your product or category, but you better do it before a competitor does. History has proven that in time, low road companies get tripped up somewhere and the low margin will erode and "poof" they're gone. The landscape of history is littered with the carcasses of defunct low-cost providers.

Dead Armadillos - The Middle Market of Value

Maybe you've heard the saying from Texas, "the only thing in the middle of the road are white lines and dead armadillos". There is a wide middle range between the high-end and the low-end of value. Too many companies are wannabes in the middle, afraid to be at the bottom where competition is fierce, or at the top where the road is narrow. As a result, they are delusional about their ability to compete with the very sharp low-value providers, or the highly desired high-value providers. They confuse consumers and typically lose more margin yield for their business than they realize, or can afford. Chances are high that this describes where your company is playing - in the middle of the road. YES, I'm talking to you. Wake up! Or you'll become yet another dead armadillo.

The High Road of High Perceived Value

Creating the perception of high value by nature requires that there is actual value to back it up in the moments of truth when the consumer finds the stuff your product or service is made of. They will usually find flaws at the worst time - when they really need the higher value attributes and benefits.

Creating a High Perceived Value

Carefully construct the specific standards of the quality of the product itself, the store environment it is presented in, and the experience of the customer required to reflect your value proposition. These features of quality are not the reasons why people will buy, which is with their emotional desires such as "I deserve it", but they are among the reasons they will justify the high-value purchase. "It is worth it."

Be specific with your points of high value. "I know it when I see it" doesn't cut it, because it isn't all about you. You're dependent on the perceived values of those who build and deliver your product as well as the consumers who buy it. Clarify the details that make up the value for them. If you can't do this, how do you think they will?

Building Aspirational Value

Understanding how value is perceived helps develop an understanding of how people would aspire to join a brand with regular investments in buying its products, rather than a one-time event to buy a product. Moving into the aspirational level of value is critical because you will more effectively reach a broader audience of people who will splurge to get what you've got, and will be loyal to your product or company making more purchases from it as their income rises.

Driving Value Up

Think of America's longest linear park, the Blue Ridge Parkway, running 469 miles from the Smoky Mountains in North Carolina to the Shenandoah Mountains of Virginia. On this route at the top of the Blue Ridge Mountains, as the name implies, you'll see a diversity of flora and fauna including wildlife, like black bear, white-tail deer, and elk up close and personal. And you'll enjoy incredible views and vistas.

Along Skyline Drive, a 105-mile portion of the Blue Ridge Parkway, you'll enjoy the spectacular mountain views, but you will need to frequently pull over into the 75 scenic overlooks to do so safely. Safe travel on the narrow, winding, road with a 35-miles-per-hour speed limit means you'll be going slow around the bends, and that you won't be using the time-saving measures of passing lanes and tunnels through mountains along the Eisenhower era superhighways.

This scenic highway experience is not for everyone, because few can afford the high cost of the 3-4 hours of time it takes for a scenic drive, depending on how many stops you make in the overlook areas. Then there is the $25 per vehicle fee.

The scenic highway metaphor is an interesting way to illustrate the High Road experience, and a great way to think of how your brand is positioned for perceived value by your customer.

Sidebar: Protecting the Scenic Views along the High Road

Build defenses into your organization to keep you from sliding into lower value creating habits.

Protection #1 – Slow Down and Think. The speed limit is only 35 to keep you from going too fast and missing a curve. Take the time to think through your higher-value proposition. Be intentional about it.

Protection #2 – Align Everything. A consistent presentation in all areas is necessary or it “dings” the value. The trinity of value are product, store environment and service. If any one of these is not aligned with the others there is perceptible disconnect in the value chain. Make sure everyone in your company is safely in place first, before you to market for customers.

Protection #3 – Be Vigilant and Disciplined. When people are involved value tends to erode. This is the pull of our culture. We are all influenced by what we see other marketers do and too often copy first and think about what we’re doing later. Know that most companies are doing it wrong and watching what they’re doing will lead you astray. Resist the urge to discount the value you’ve created. Applying discounts after you’ve established value erodes the value you just attempted to create, so it wasn’t really created. If we take a few extra moments to consider the impact on our value of doing what others are doing, we will often decide to NOT do the value-eroding thing we would have otherwise done. 

Protection #4 - Pull Over into the Scenic Overlook.  Bask in the sunshine on the ridge of the high road. Take time to reflect and enjoy the perceived value view you’ve created. This breather will help you keep your mind clear and will protect you with a feeling of appreciation for what you’ve accomplished that few others do.

Your Friend,

Sid

Sid is a consulting Service Provider to The Garden Center Group and also serves as President/CEO of Bower & Branch. Sid has been inventing and reinventing the way things “don’t get done” into “get it done” strategies that increase profit-ability, market-ability, oper-ability, and owner-ability of garden centers, landscape operations and a few wise suppliers of plants and products. It’s not 38 years of the same thing, it’s thirty-eight increasingly effective years dedicated to improving and re-inventing the inter-dependent horticulture supply chain. He’s constantly challenging “that’s how we do it”, “we tried that”, and a dozen or so other excuses. Sid knows how to get people to get things done by overcoming underlying attitudes, fears and lacking resources. When you read Sid’s articles or hear Sid talk “put your ears on” and listen up, and get ready to think and implement changes that will take you and your company to new heights and new places. Contact Sid at 937-302-0423 or email to [email protected]