Understanding the interplay of value components vital to sound strategy
By Robert Wheatley

In his excellent book entitled “The Momentum Effect,” author J.C. Larreche describes the unique characteristics of momentum driven businesses that seem to grow more rapidly at the top line because consumers flock to their value proposition. He says: “Momentum powered firms don’t just offer good customer value, they offer compelling value - a value so intense and personal that it resonates with their needs in a gripping and powerful way.”

But value isn’t just a quick summation of benefits, features, price and the rational evaluation of those pieces. Nor can heavy investments in PR, advertising and promotion make up for an inadequate or misguided value proposition. Larreche suggests the offer must be compelling to be powerful, and what is compelling to one consumer can miss the boat entirely with another. Thus perception indeed drives reality in the marketing world.

What is value?

The only reason consumers buy a product or service is to obtain value. So if we know what constitutes value for one consumer vs. another is truly in their minds’ eye then it only makes sense to invest energy and time to fully understand the value components among different customer groups. Compelling value, by the way, is what permits certain brands to gain traction and enjoy the marketplace benefits of sustained momentum.

The goal for agencies and clients together is to identify the ingredients that can optimize customer value. It’s worth noting that functional benefits are only a part of this evaluation, and even in a bundle, must also be seen in context with the intangible and emotional values consumers also place on brands.

So as Larreche conveys, value is at once “broad, subtle and variable.” The desired zone brands wish to reach is the potential momentum building intersection of high benefits at reasonable to low cost. And by definition, working to avoid the nether world of low benefit to high or extreme cost.

Value components…

There are four that require systematic investigation among various customer groups.

* Functional- the physical properties, performance and features such as taste

* Financial - and its not just price alone. High prices, for example can be a benefit when it reflects an important sense of quality or exclusivity

* Intangible - Dos a brand convey a form of social status that’s important to its user? Time has value to some consumers - does the product help reduce time commitments? Perceived innovation can be important to those who define themselves as always being “on trend”

* Emotional - to what extent does the brand elicit happiness, pleasure or perhaps fear? This is perhaps the most important component of value because emotion drives action and action is at the core of decisions to buy. Most often emotion will be the primary component of purchase and holds sway over the logical arguments presented in functional values

Larreche developed a handy tool to help organize these ideas. Here it is in graphic form:

Note the “business end” of the wedge lies in the least understood area of emotion and is pointed down like an ax blade. It’s the most important component of value that can work to crack open new market opportunities. The more tangible, well-understood elements of function and price are at the top end, and are often harder to differentiate competitively — as so many categories today are populated with brands offering similar solutions and technologies.

The end game: conduct a rigorous, systematic investigation of all the value wedge components. This information can help brands optimize these elements to produce the highest potential level of perceived value - again as seen through the eyes of the consumer. Once value is properly diagnosed, brands can use this knowledge to create a compelling offer that will resonate with consumers. The goal is to power up momentum and deliver stronger results per dollar invested in marketing communications activity.

What do you think?