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What value do your products deliver?

June 24, 2010
Image of an Austin Mini

Austin Mini - great product, wrong price. Knowing your value lets you get the best profit from the smallest things

One of the difficulties facing marketers and sales people is understanding what their companies’ products actually do for people. It is this lack of comprehension which is one of the fundamental drivers of sales and marketing underperformance. It is also a key driver of corporate underperformance. So, what value do your products deliver? 

Value is not defined by what a product does but what it achieves for the end user. 

A painter and decorator, for example, does not just paint a house. He/she makes it look nicer, waterproofs it against the weather, saves the cost of replacing wooden components before their time, saves the effort (and potential danger) of doing it yourself.  

An information service for pharmaceutical professionals isn’t just an online service. It’s a way of monitoring competitors, honing and pricing offerings, researching industry trends without hiring expensive trend analysts, keeping a weather eye on local legal restrictions so the reader can ensure successful regional sales. 

A book isn’t just a book. It is a passport to greater understanding. It can improve your knowledge or broaden your mind. If it’s a business book it can enhance your performance, delivering greater efficiency and profits. 

Why is this important? If a painters viewed themselves only as painters, clients would look for the cheapest painter. If an online information service was seen just as a news service, clients would choose to look for information free on the net. If a book is seen only as a book, no one will pay more than £20 for it (if you’re lucky). 

One of the worst examples of poor value-price relationships concerns the early BLMC in the 1960s. Here was a car which was priced to compete with the motorcycle and sidecar rather than competing on its own value. When the Ford Motor Company acquired a Mini, they took it apart and were shocked to discover that they could not make it themselves for the price. That was because each Mini was being made and sold at a loss… 

Today, BMW, the new makers of the Mini, have pitched the car at a different market. It’s not cheap. It’s not cheerful. It’s not even British (well, it’s assembled here like the Nissan Micra). But it is profitable. Because BMW, if not makers of particularly inspiring cars, are experts in telling people a brand story

If inherent value is understood, products and services can be priced on their delivery. A failure to understand the inherent value of products is one of the biggest drivers of financial underperformance, yet many companies fail to invest the time in defining, communicating and training their staff in the value of their products and services. 

The result of this is that customers cannot see the value on offer, cannot read about it, and are therefore unwilling to pay for it. Potential sales are lost. Sales which are made are concluded at a lower price. Revenues are lower. Profits are down. 

What value do your products deliver? Know your value, know why you’re different, know your customers. Then you can deliver stronger results.

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