You can still compare apples and apples right? Not anymore.

Apples

Would you pay a premium for a product of perceived higher value? Would your parents? Would your grand-parents? Do seemingly environmentally or socially responsible purchases make you feel warm and fuzzy inside?

Over the years consumer behaviour has shifted such that the consumer is influenced by the promises of perceived value. From branding to the promise of social responsibility, the consumer now seems more willing to pay more or accept a lower quality, because it feels right. Deep down we all know these gimmicks don’t cost the manufacturer anything, where an increase in input costs exists, they are immediately passed onto the consumer anyway. When did this perceived and intangible value become more important than tangible value like price, quality and accessibility?

Let’s start with an example, the perceived value of a brand.

While getting my haircut this week I read a “GQ” magazine which contained photographs of a model wearing various clothing, the item and the price were listed in the corner of the page. I was dumfounded to learn that a plain, cotton T-shirt was priced at almost $200 dollars. A comparable shirt from most department stores retails at between $20-$50. Both items provide the same tangible value, a comfortable and colourful item of clothing.

tshirts

High fashion cotton T-shirt(left) an identical common cotton T-shirt(right)

“Would anyone buy this? What would they get out of it?” I thought to myself. The lure is in the brand-name, the perceived quality and perceived status that ownership of such items brings. The perceived benefit is just too strong.Unfortunately it still only takes 1 brush past a frayed fence to turn both shirts into the same $2 worth of cotton cloth.

Another example, the rise of so-called non-genetically modified foods.

Years of research and scientific advancement has lead to the creation of genetically superior crops. Consumers have benefited from the improved quality, reliability and price. But now some marketers have managed to sell people on the perceived value of what is ultimately a higher priced and lower quality product, the often talked about non-GM food. In this case they have essentially slandered the alternative to create a negative perception.

The consumer gets no tangible material benefit from buying non-GM food, in fact there is a marked loss from buying this product. Yet they flock to this product, not from a strong perceived benefit but because of the demonization of the alternative.

squassh

Notably lower quality and higher priced non-GM golden squash(left) vs. regular commercial squash (right)

The list goes on and on, here are few I’ve noticed just this past week:

  • The promise that a small percentage of my sale would be donated to a charitable foundation.
  • The advertisement that a products packaging is fully recyclable.
  • The advisement that the coffee I was about to purchase was of the fair trade variety.
  • The proposition that I should purchase milk only of the A2 variety.
  • The offer to offset the carbon created by my trip for a nominal fee.

Have consumers always behaved in such a manner as to be enticed by these trivialities or is this behaviour of a modern consumer? In this age consumers are faced by unprecedented choice, and where an apple really is just an apple, they are still forced to choose.

“How has this happened!?”, you may ask. You may say that your grandparents had enough to worry about trying to crawl out of the mud, intangible value was the least of their worries.

The truth is that through the careful training of the consumer, they have been taught to look out for intangible and superfluous aspects of products before making purchases. They have been told the benefits of some aspects in the hope they will look out for them. Equally they have been taught the negatives of some alternatives so they will preclude them from their choices. They even do it at the cost of important and tangible value.

Ultimately, consumer behaviour has been shifted so that they look out for certain properties of a product that have a perceived value before making purchasing decisions. Many of these properties seem to be related to perceived health, environmental and social responsibility which did not enter in the product to purchase equation in the past.

Ultimately, marketers must adapt to this trend in consumer behaviour or else be beaten in the market by competitors offering what are essentially intangible and often free to offer benefits, especially when they can charge the consumer more.

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7 thoughts on “You can still compare apples and apples right? Not anymore.

  1. Hi Dan,

    Great post- I often scratch my head wondering why people (including myself!) pay more for products that appear to be of inferior quality simply because it feels like the right thing to from a social or environmental persepective. Clever marketing indeed!

    However, I also think it is facinating that many of these same people are driving the increased popularity of private label products. Suggesting that another key motivator in respect to product selection is price. Private label products are often marketed as being a cheaper alternative to the hero brand- typically packaged and named to closely resemble the branded product.

    So whilst I think in many cases consumers are willing to pay more for products that have a higher percieved value (including the warm and fuzzy sensation), this is also juxtaposed aginst a trend to buy products at a reduced monetary cost but with a perception that the cheaper product delivers the key features of the more expensive alternative.

    Jackie

    Liked by 1 person

  2. Perceived health, environmental and social responsibility factors have always been of interest to consumers – cigarettes, DDT, softdrink for babies, and ‘vitamin donuts’ were all marketed to improve health! (http://www.collectorsweekly.com/articles/the-top-10-most-dangerous-ads/).

    If you look at it from the point of view of a consumer who those marketing elements appeal to, there are a number of different motivations – political, idealistic, environmental, or peer-driven. While you may not be in the market for an organic wholegrain quinoa-printed free-trade t-shirt for $200, there is probably a niche market for it. The product is distinguishing itself from other t-shirts, which all marketing does, doesn’t it? And maybe that quinoa and organic certification did add an extra 300% to the cost of the t-shirt!

    Liked by 1 person

    • Hi Lissa, Thank-you for your comment.

      I generally agree with your sentiment. It seems that when the marketer runs out of physical ways to differentiate a product, they can simply turn to the intangible. By adding all these perceived benefits they create a niche market, and at $200 a shirt they may not need to sell many units to turn a profit.

      On the flip side, in some cases they don’t appear to be aiming for a niche market at all. In the case of the fair trade coffee and the A2 milk, the marketer is actually trying to bring their product to the forefront by educating the consumer to preclude the alternative from their purchasing decision. I imagine that the long term goal of this marketing is to actually make their product the standard.

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  3. Hi Dan – I’m not sure that I agree with your premise marketers have trained consumers to only look out for the intangible aspects of the product compared to the tangible aspects. I certainly agree the promotion of these intangibles has increased since our grandparents’ time but I wonder if including the intangibles in our decision making process is more in line with our disposable income.
    Our disposable income has increased steadily since the 1960s (Australian Bureau of Statistics – Australian Disposable Personal Income; http://www.tradingeconomics.com) so the ability for us to purchase luxury items has increased. I will certainly include intangible aspects as part of my decision making but if I don’t have the disposable income available, I’m not going to spend $200 on a designer t-shirt, no matter what the marketing tells me.

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  4. Interesting topic. I think you have successfully brought up how marketers have been educating the consumers and how they should continue to do that moving forward. I am not sure if I totally agree with your examples though, because (i) I do see differences in those examples you have given (e.g. a $200 t-shirt has a better value than a $20 t-shirt as it’s more long lasting); and (ii) I think customer experience and customer satisfaction do add on to how a brand and its products are perceived. To that second point in particular, as a customer, I also pay for the experience and satisfaction that I get. Indeed, as I research on the topic, there are studies around the relationship between customer satisfaction and customer behaviour, for example:
    http://www.emeraldinsight.com/doi/pdfplus/10.1108/09564239810210532

    All that said, if it is really an apple compared to another apple from the same origin, it is very true that marketers should play on certain properties. But as lissa suggested above, all marketing does that, so key for me is to play with these properties wisely and look more at things that you have brought up – health, environmental, social responsibility – and that customer experience and satisfaction should not be left out of the considerations.

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  5. Thanks for your very enjoyable post Dan. Nothing like a bit of controversy to generate a more interesting discussion! I think you have a few good points however I’d suggest your view of the customer behavior occurring in this domain is perhaps a little too cynical.

    Firstly, consumer interest in the ‘intangibles’ is far from a new trend. It is as old as the concept of ‘branding’ itself which in essence trades significantly in the realm of ‘intangibles’ (eg. creating ‘the feelings’ accompanying the purchase & use of the product).

    Thus the growing interest in ‘ethical purchasing’ is reflecting new or expanded value propositions which companies can offer through their products. I do not agree that customers have simply been conditioned by clever marketing strategies to seek these ‘intangible’ product attributes so that increased profits can be made. Rather, there is an element of this purchasing behaviour change (eg. the desire for Fair Trade alternatives) that is customer driven – and some companies have caught up to the fact that this has opened up new marketing opportunities that can be leveraged. Eg. Cadbury was one of the first mainstream brands to catch on to this in response to a growing groundswell of customer expectation ( https://fairtrade.com.au/news/cadbury-dairy-milk-go-fairtrade-2010 ). The relationship between customer initiated needs/wants and the ‘conditioning’ of customers by the companies marketing their products is a dynamic and two-way process. As a side note… the successful marketing strategies of FairTrade activist groups to raise public awareness about these issues has clearly been an influential factor in achieving this change in consumer behaviour.

    Finally, there may be some danger for a marketer to define these ‘intangible’ attributes of products sought by customers to be ‘trivialities’ or ‘superfluous’. For some it may not simply be the ‘good feelings’ that these customers want – but the actual (or perceived) tangible social, health and environmental outcomes that their purchasing behavior can contribute to achieving. As your post has identified, these product qualities are driving the purchasing behavior of consumers for whom such factors are anything but ‘trivial’ or ‘superfluous’.
    Ultimately, the value proposition of the product is in the eye of the consumer, and the evidence is telling us that there are growing market segments that are seeing the ‘two apples’ as being very different pieces of fruit indeed.

    Liked by 1 person

  6. One way of looking at this is that consumers are purchasing more than just an apple but the whole package including the intangible properties that the product comes with. Things that in the past were not important to consumers have become so in recent years.

    Consumers have an even increasing awareness of the environment and socially responsible practices. There is a “feel good” factor about buying environmentally friendly products and it seems to be just the sort of thing a person can show off to their friends about.

    However is a trade-off between intangible and tangible properties worth it? Would a consumer rather buy a poor quality product if it were better for the environment?

    Like

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