BLT networking – The difference between price & value?

At our latest BLT meeting, in the wake of the recent bitcoin phenomenon, we discussed the difference between price & value.

“If it walks like a duck and talks like a duck … then it probably isn’t a swan.”

This topic was prompted by the recent headlines detailing the extraordinary rise in value of the bitcoin, which has all the makings of a classic asset bubble. This is not a new phenomenon – back in 1633, “Tulip fever” swept the world, peaking with the price of a single bulb changing hands for 10 times the average annual wage.

Quotes from around the table

“The warm feeling of low price is long forgotten when low quality surfaces.”

“I don’t want to take over the world…I just don’t have the energy.”

“I was tempted to change my provider with a ‘baited switch’ that I soon came to regret.”

 

It’s much harder to put a value on a service

Products are relatively easy – there is an immediacy about them ; needs must be met and it is readily apparent when they are not; e.g. the £4 t-shirt which shrinks in the wash, the £12 non-waterproof tent…etc.

However, services are more difficult to value since they are (often) intangible and must fulfil a need over time (a need which frequently isn’t articulated).

When value differs:

• Speed of delivery – when people need something in a hurry, they are less price conscious; e.g. the willingness to pay a premium for peak rail tickets.
• Resistance purchases –
• Different perceptions  – this can vary both by service type and by age; e.g. What an older person might consider a luxury, a millennial could consider a necessity, such as designer gym membership.

John Lewis was the brandname trotted out as an example of excellent service. On the product side, their ‘Never knowingly undersold’ motto means they set a benchmark for price, but the real clincher is the value of their service offering, that they will refund without a quibble if things go wrong, even if it happened to be outside of their control.

It’s interesting, that the top brands in many industries where service is key – e.g. Hotels, restaurants – distinguish themselves on excellent service and no quibble refunds.

The drawback with “Prices from…” deals:

• Misdirection – The picture next to the service offer is never related; e.g. You think you’re getting a four-person physical office, but by the time you realise you’re only getting a virtual office, it’s too late.
• Ryanair – in many ways, Ryanair is unerringly honest in that you know upfront you will have to pay extra for everything
• Black Friday – a number of retailers have reported that it is destroying their Christmas sales; people are waiting to buy what they would have bought anyway, but as their expectations have already been set (i.e. they will get a bargain = their perceived value) they are refusing to compromise on price.

Conclusions

1. Value is a feeling

2. Service is paramount

3. It’s all about trust

(*) BLT is a free fortnightly networking group that meets from 7:15-8:45, every other Thursday at The George & Dragon, Marlow.

For more details, please leave me a message – new networkers are always welcome.

The next meeting is Thursday 21st December.