Thursday, July 17, 2008

The seduction of added value.

The seduction of added value.

If you want to sell a product, any product, you need to understand value.

Value is the single reason why people buy things.

I don't mean we buy things when they are “good value for money”. I mean we buy because of a perception of value. Many people for example might not buy a Mercedes because you can get a Toyota much cheaper with a similar specification and yet Mercedes sell a lot of cars, they just sell them to different customers. The people who buy luxury cars have their own set of requirements which they value, the price has less of an impact on their perception of value than for other car buyers. What motivates a luxury car buyer might be Brand name, appearance, exclusivity (sometimes by just making a product expensive, you make it exclusive and therefore attract people who have enough money to want to be seen as part of the 'club' of owners of that product).

To sell you product you first have to understand your customer and what represents value to them.

People who buy Apple Mac's have a different set of value requirements than PC owners. This can bee seen by all the Mac vs. Pc comparisons on the Internet. If we all valued products for the same reasons, simply comparing specifications would be valid and perhaps PC's might winout. By Apple adds value to their computers. Apple gives a more stable product with great free software in a stylish all in one package with a unique operating system. This appeals to their customers who don't necessarily care the computer is the highest specification for the lowest possible price, without the ease of use and style that has become synonymous with the brand, there is little value to that customer.

Anything can represent value within a customer base, look at how quickly the world adopted MP3 as a music format. People wanted a small file which would allowed the files to be downloaded quickly, even though it meant the quality was sacrificed a little.

Value = Matching a customers needs (physically or emotionally)

Once you know what motivates your buyers, you can use a killer strategy to skyrocket you sales: Added Value.

Added value is the preferred way of improving the buyers perception of value without having to discount your product. Once you latch on to the motivation of you customer you can use this to add value. Added value is created when you provide some further incentive to make a purchase. You could offer additional products or services that may also be desirable to your customer at a reduced rate (or free) with their purchase.

In any case you should try to provide added value with minimal cost to you. Online services and E-books can be perfect for that.

Discount should be avoided if you can create value some other way, however sometime the best strategy is to offer a product at a premium in the first instance and then after the initial phase of the product cycle where it's new and interesting you will be able to discount it.

Although its always a better strategy to find other ways to add value, discounting is also added value. By establishing the products initial worth you are showing the customer they can now buy something with an already established worth for less money. Getting more for less equates to added value.

And added value is seductive. My wife an I recently walked past an nice looking furniture item in a shop which had been reduce from €129 to €24.95 it looked like it was worth every penny at €129, now it was a bargain. My parents who were with us at the time also agreed and we were ready to buy it until we realized we actually had nowhere to put it and did not need it anyway. We were simply stunned by the value.

Internet markets do the same thing with E-books. Because delivery is so easy and they don't actually have to produce anything, they can give you lots of bonus books and newsletters.

As added value for this article, feel free to download a free ebook on making money with Google arbitrage (a process of making a profit by paying to send people to a website with advertising so they in turn leave through more expensive advertising). Right click here and click 'save link as' to download it.

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