Perceived Value vs Consumer Values: Striking A Balance

Following a tumultuous 2020 and a challenging first half of 2021, there seems to be a reckoning in the way that consumers spend their money. There is a battle going on between value and values for what a customer wants and needs from a brand. Value in this sense refers to the monetary or material worth that a consumer derives.  Values are less concrete and in this context refer to basic and fundamental beliefs that guide or motivate attitudes and actions, such as purchases. This article will look at the two concepts and analyse why both should be considered relevant.

Perceived Value

Perceived value is the customers' evaluation of the merits of a product or service. According to the Swiss Re Institute, surveys have found consumers in several regions worldwide shifting more to value-based purchasing as a result of the Covid-19 pandemic. McKinsey reflects a shift to value and essentials. 51% of shoppers see price and value as integral when asked which factors inform their purchasing decisions. 
 

Why has value arguably become more important? The coronavirus pandemic has caused a crisis of income for many families, making every penny count for every customer. Especially at the start of the pandemic, job losses and unemployment started to become more and more prevalent. This began leading to  consumers being more concerned about handling their money with more care. 

Consumer Values

We’ve discussed value and what that means for consumers, but what about values? Values are the motive behind purposeful action. What does this mean for consumers? The belief is that a product's perceived value will be less about its price point and more about its alignment with a buyer's values.
 

These values include:

1. Familiar overall value systems that they instinctively align with based on their own experiences. Searches for ethical online shopping have grown by 600% reflecting a change in the habits. With customers leaning more towards their values than the cost of a product or service. The increased adoption of local businesses for general shopping as a sign of support has been another way in which customers could be seen to have led with their values rather than just thinking about value.
    
2. Support for specific organizations and causes that your audience can get behind. In addition to the coronavirus pandemic, the Black Lives Matter movement’s growing prevalence in 2020 seemed to have an effect on consumers. This was shown in the support of black-owned businesses seeing a marked increase. This could show how support of a movement in a form of social responsibility has influenced purchasing decisions. Therefore reflecting the importance of values when looking at a customer.
    
3. Meaningful interactions with brand representatives that solidify the customer’s overarching relationship with the brand. Furthermore when considering other important aspects of a consumer’s reasoning, customer service is vital. 61% of consumers would pay more to buy from businesses that delivered a good customer experience during COVID-19. This reflects how the pandemic has increased the need for good customer service in addition to brand value and personal values being vital.

Other considerations?

We have reflected on the importance of both value and values for the modern consumer following the pandemic. There are however other arguments to consider. This includes the importance of convenience for a consumer which was reflected in the exponential increase of home grocery deliveries due to people being confined to their homes.  Over half of consumers globally discovered at least one form of online shopping.

What’s the answer?

Despite the growing importance of values for the consumer, the coronavirus pandemic has highlighted how value is still always in a customer’s mind. This means there is not a simple answer to the question as to which is most important to a customer: they both hold equal importance. There is no getting away from the fact that brand value and personal values are converging. You need to make sure that your business is able to withstand this and to make sure that a balance can be struck. Read our advice below. 

What’s our advice?

You need to make sure you understand what your customers (and perhaps different segments of customers) value - this should be the basis for your new product development, user experience design as well as your marketing communications.
 

As for value, understand what the perceived value of your product or service offering is when creating your pricing strategy. Using focus groups and test markets is useful in trialling and getting initial feedback before full launch.
 

Lastly, if you understand what value your brand and products offer to your customer, you can more easily establish the basis for incentivising and rewarding your customers.