The Key To Creating Value For Customers...


No brand has the right to exist.

Just because a brand's been around for some time, it has no special privileges. It has to earn that right, by creating value for customers each and every day.

So what is it that creates such value?

According to what I was originally taught, the answer lay in creating the right mix across the 4Ps of marketing - product, price, place, and promotion -, and in particular, the right balance of product quality and price.

However, once I started to explore this question with customers, things started to look different.

First, it became apparent that simply increasing quality didn't necessarily increase value.

I remember testing two chocolate birthday cakes with customers. They were similar, but for one important difference: one had been made from the finest artisan chocolate, which made it significantly more expensive, the other from a more widely available chocolate. It turned out that customers couldn't taste the difference. The artisan chocolate was an addition that simply had no benefit, it didn't make the cake any more useful to them. Not surprisingly, they weren't prepared to pay for it.

Subsequently, I noticed this playing out time and again in category after category: features continually being added to products, to make them "better", which just didn't make them any more useful. Instead, it opened up opportunities for new brands that simply focused on delivering what really mattered to customers. Southwest Airlines or JetBlue, for example, offered streamlined services, in contrast to the major carriers. Google offered a simple search experience, in contrast to the busy portals of Yahoo, AOL, and the like.

Second, I found that the value customers placed on quality varied, according to what they wanted to use it for.

For example, customers considered a bulk pack of basic cookies quite satisfactory for a kid's party, but felt gourmet cookies were far more useful for a dinner party. Similarly today, while smartphones, tablets, and PC's may all access the internet, people are using a combination of them, as they are useful in different ways: smartphones for tasks on the go, tablets for browsing or entertainment, and so on.

Third, a product or service was only useful to them if it could be relied on. This, of course, started with the product working every time it's used, but it was also expected across the whole customer experience.

(The Push And Pull Of Customer Experience...)

I found, for example, with supermarket shopping, that issues such as gaps on the shelves, disinterested staff, and lines at the checkouts would turn customers away, even if they liked the product assortment and prices. Websites that take a long time to load, or have difficult checkout processes, have a similar effect today. 

Fourth, of course, price played an important part, as it had to be affordable to be of value. But this was more about the balance of usefulness and price, rather than of quality and price.

For example, while there's no doubting how useful Apple products may be, for many they are just too expensive. Hence the opportunity for alternative products, that are cheaper, and offer some, but not all, of the utility. And I don’t know how many people I’ve heard say how useful Whole Foods could be to them, if only they could afford to shop there.

And what was considered affordable could also change, according to how and when customers wanted to use it. A cup of coffee as part of Starbuck's "third place" had more value than a cup of coffee out of a vending machine. Popcorn and soda had more value on a night out at the cinema, than they did on supermarket shelves.

Usefulness, reliability, and affordability: I found these to be the functional building blocks of value.

Fifth, however, it became evident there was also an critical emotional dimension.

At one level, how a brand made a customer feel was simply the outcome of the mix of functional benefits it offered. I found that grocery stores, for example, could make customers feel very differently: comfortable (e.g. supermarkets), smart (e.g. Costco), or excited (e.g. Trader Joe's).

(How Does Your Store Make You Feel...?).

But if a customer liked what a brand stood for, and how it behaved, the value that it had to offer increased. This lay behind the loyalty that Trader Joe's inspires, for example, or the premiums that Nike or Patagonia command. Such brands had become a means of expressing one's own identity. They had a meaning beyond the functional benefits they offered.

Nevertheless, such brands still had to be functionally useful. The Prius, for example, only really took off when it drove like a car (before gas prices created a whole new level of usefulness). I'm always struck by how many of these brands (e.g. Apple, Lululemon, Nike, Patagonia, Target) have a commitment to product excellence at their core. 

Rather than a simple balance of product quality and price, in many ways, usefulness, together with reliability and meaning, turned out to be the real drivers of value.

Offered at an affordable price, they create value for customers...

...And earn the brand the right to exist.