It’s All About Value… A new Perspective
Abstract
Marketing is all about creating value for customers. If there is no value for customers, there can be no value for other stakeholders. Our understanding of how customers evaluate value must evolve. Today, an important factor affecting perceived value is the trustworthiness of the brand promise. Being the most trusted brand in a competitive set is a big competitive advantage. Building Trustworthy Brand Value™ is associated with lower price sensitivity. Marketing needs to change its mindset and its metrics.
It is all about value
Marketing is about creating value. Marketing creates value for customers, for employees, for shareholders, and for the community. At its core, marketing begins with creating value for customers. If there is no value for customers, there can be no value for other stakeholders. Customer-perceived value is marketing’s connective tissue crossing geography and time.
There is an underlying enduring definition of customer-perceived value: value is what you get and do get for what you pay. This has always been the customer’s mental model when evaluating the worth of a good or service. However, our understanding of the customer’s mental model of perceived value needs to evolve.
In the early years of mass marketing, marketers focused on features for the money. Marketers promoted products by celebrating features. So, for example, a new refrigerator was sold featuring its special compartment for vegetables, or a chocolate bar was promoted as having 20% more nuts. Brand value was represented as features for the price paid.
Over time, we learned that customers sought products services that had the right features, but they asked, “Which brand is best for my individual needs?” Needs-based marketing became a marketing standard.
Customers look for brands that not only delivered the desired functional benefits but also made them feel good about the choices they made. The value equation became functions and emotional benefits for the price paid. Money is not the only cost that people consider when evaluating value. Time is also important. Over the years, customers increasingly view time as precious as money. Is it worth the money and is it worth the time?
Total brand experience vs. total brand cost
Consumers view brands as comprehensive, integrated, multidimensional experiences. The total brand experience is the combination of functional, emotional and social benefits. Social benefits are not just about sharing and belonging but what sort of image the brand conveys about me. Personal, visible social status can be a significant driver of purchase.
Customers say they want more choice. Market segmentation and increased fractionation have led to an over-complicated world of choices. With multiple choices, decision-making becomes a tremendous effort. Using a product or service should be easy. You could have all the time in the world, and yet it may take too much effort to figure out how to choose the right offer for your needs. Choosing how to get service, how to use online ordering, or how to interpret a product label should not take excessive effort. Make it easy to choose and easy to use.
This led to customers assessing a brand’s value based on their perception of the total brand experience – TBE (functional, emotional and social benefits) relative to the total brand costs – TBC (money, time and effort).
Trust is a value multiplier
There is a very important factor that is influencing the brand value equation. That factor is trust. Trust – in institutions such as governments, education, religions, media, businesses, and brands – is in decline. Trust is under attack. We live in an uncertain world. Yet as humans, we seek touchstones of trust. Trusted relationships are at the heart of how we live, how we grow a society, and how we grow a business. For businesses, loss of trust affects market share, brand perception, and profitability. For enduring brand value to exist, trust is a must.
Trust is an increasingly important factor affecting customer-perceived value. The new equation of customer-perceived value is total brand experience (TBE) relative to total experience costs (TBC) all multiplied by trust. We call this the new Trustworthy Brand Value™ equation.
If trust in the brand is high, the perceived brand value is increased. If trust in the brand is low, the perceived brand value is decreased. If there is no trust in the brand, then it does not matter what the brand experience is relative to the costs: anything multiplied by zero is zero.
What is trust?
Trust is an Old Norse word traust meaning confidence. Trust is the confidence customers have that a brand will live up to its promises. Trust is the confidence suppliers have in doing business with you. It is the confidence employees have in your leadership. It is the confidence investors have in your business future.
Trust has been at the basis of business since the beginning of business. A trademark, hallmark, maker’s mark was a trusted sign of quality: a sign giving you confidence that the silver was truly sterling; the pewter was the correct mixture of alloys; the cloak was from the expert tailor you preferred; the silks were from China; the dinnerware from Delft; the beer from your favorite brewery.
The trusted mark not only identified and protected the reputation of the maker but protected the purchaser as well. A creator could trust that others would not get a free ride on his or her hard-earned reputation. A buyer could trust the origin and quality of the work. Now, centuries later, this is still the big challenge of brand management: make your brand a mark you can trust.
How do we build Trustworthy Brand ValueTM?
Marketing is about creating value for customers. Yet, marketers are often misguided in how to define value. Marketers tend to assess brand worth by asking customers whether a brand is a “good value for money.” As a brand evaluator, this generic metric is killing perceived brand value understanding.
Our recent research posits a new approach: it shows that asking whether a brand is “good value” does not correlate with price sensitivity. It is too general. It is too vague.
On the other hand, Trustworthy Brand Value is more discriminating. It correlates with price sensitivity. As Trustworthy Brand Value increases, customers are less price sensitive and are willing to pay more.
In our most recent book, Six Rules of Brand Revitalization: Second Edition (Light and Kiddon, March 2016), Rule #5 is Rebuild Trust. How can brands create and build Trustworthy Brand Value?
Here are seven common sense marketing actions for building Trustworthy Brand Value. These principles focus on guiding brands to profitability.
Seven Actions for Building Trustworthy Brand Value
1: To be a leader, act like a leader
Be a trustworthy leader. Trust leadership is not about how big you are; it is about how big you act. Leadership is not about the size of the business. It is about the size of the business ideas. The market impact of brand leaders outweighs their market share.
Market leaders have an opportunity and a responsibility to lead. When people attack, they attack the leader. Some call this the penalty of leadership. We call it the prize of leadership. When a leader speaks, the world listens. In today’s climate of uncertainty, the imperative is to stand up for what you stand for.
Leaders innovate, they do not just renovate. Dyson built an amazing brand on a series of consistent, relevant innovations. He began by addressing a common problem in an industry that had not innovated for years. He designed a delivered a superior performing and bagless vacuum cleaner. He followed this by inventing a powerful fan that had no fan blades. He re-invented the hair dryer to make it safer and better. Dyson is a leadership brand.
2: Deliver what you promise
Trust means that a brand will consistently live up to expectations. Promise what you can deliver; deliver what you promise. Be specific. If you promise everything, you promise nothing. Make a trustworthy promise that if you buy this brand you will get this specific experience. A brand is a contract with a customer. Live up to the brand contract.
Starbucks promises a place away from the home or office, a convenient café experience where you could relax alone or sit with friends, work on your laptop or read a newspaper, and you get a choice of personalized great coffees made by trained baristas. When Starbucks lost touch with its promise, sales declined. Howard Schultz, the founder returned to the helm restoring the brand to its original premise. Promise what you intend to deliver, and deliver what you promise.
3: Be a trusted informational and educational resource
Information reduces uncertainty. In a world drowning in data, the challenge is to transform that available data into accessible, valuable, trustworthy customer information.
Amazon enhances its online mall store by offering information personalized for you, suggesting products you might like based on what you have purchased. And, these recommendations are accompanied by customer reviews. People often trust the information from peers more than the advice of experts.
Information not only informs but it educates. Information helps people feel competent through knowledge of how to use the information. Competency breeds comfort. IKEA has an online responsive helper named Anna. Go online and “Ask Anna” for help if you need a new kitchen item or if you need a new kitchen.
An Apple computer is certainly intuitive and easy to use. But, if you are computer challenged, Apple provides 100 hours of free lessons to help make you competent and comfortable. P&G wants to educate consumers on the ecological benefits of washing your clothes in cold water to save energy used when heating water. The #TurnToCold program provides a wealth of information on the virtues of cold water washing.
4: Simplify choice
People want more choices and more personalization. To satisfy this clamor for choice, brands now have many varieties, selections, sizes, flavors, ranges, alternatives and options. Increased choice breeds increased complexity and uncertainty. People want choice but they want choosing to be simple. Marketers and brands must figure out how to provide choice without complexity.
Drugstore.com keeps “Your List” available so shopping for your vitamins, shampoos and analgesics does not mean scrolling through 15 different menus. Just go to Your List and order again. Google remembers the sites that you visited, bringing these to your screen before you finish typing.
Keeping it simple is good. Over-simplification of a brand promise is death wish marketing. Yet, there are still those who strive to reduce a brand to a single word. A brand is a complex, multidimensional idea. Over-simplification is simplistic marketing. Brands are multifaceted experiences.
5: Be open
Being open is very important if we are to be trustworthy brand messengers. If you are seen to be hiding something, the suspicion is that you have something important to hide. And, in today’s world, it is difficult to hide, while easy and shameful to be found out.
People trust their eyes more than their ears: seeing is believing. Subway restaurants prepare your food in front of you. You can see how it is being prepared. You can customize the sandwich to satisfy your desires. Many restaurants now have open kitchens.
So, to be worthy of a consumer’s trust, people need to see the truth, not just hear you claim it. Remember, truth and trust are not the same thing. Truth is a fact. Trust is a feeling. What you communicate must be right and feel right.
6: Act responsibly
Responsible trust means doing the right is the right thing to do. It means being conscientious internally and externally.
Building responsible trust means integrating commitment to causes on a sustainable ongoing basis, as well. Consumers want assurances that your motivation is authentic. Commit to a cause closely tied to your brand; a cause that you will sustain for more than an occasional, opportunistic moment.
Unilever takes a leadership stand on sustainability in all of the countries in which it does business. Unilever’s sustainability promise states, “The Unilever Sustainable Living Plan is our blueprint for achieving our vision to grow our business, whilst decoupling our environmental footprint from our growth and increasing our positive social impact… Our purpose is to make sustainable living commonplace.” (At www.unilever.com/sustainable-living)
7: Collaborate
Collaboration is better than confrontation. Collaborate internally. Collaborate externally.
Nissan used collaborative cross-functional teams as a critical factor in implementing its very successful turnaround plan in 2000.
Collaboration is critical for brands. In our book, New Brand Leadership (Light and Kiddon, June 2015), we discuss The Collaborative Three-Box Model, our recommended approach for managing global brands. The premise is that with the forces of globalization, localization and personalization, collaboration across geography and functions is the only way for brands to succeed.
Colgate-Palmolive, Procter & Gamble and Unilever are partners in The Global Public-Private Partnership for Hand Washing focusing on hygiene as a sanitation key to increasing international health. It educates people around the world on the benefits of washing your hands with soap. The partnership members include organizations such as UNICEF, The London School of Hygiene and Tropical Medicine, USAID, and The Water and Sanitation Program at The World Bank. Ronald McDonald House Charities is an excellent example of sustaining a commitment to a worthy cause.
Trust is the foundation on which strong, sustainable brands are built.
Trust takes time to earn. But, trust can evaporate in an instant. This is a current challenge for Volkswagen and J&J, for example.
In the 1990s, Perrier lost trust when the quality of their water sources was questioned. It took years to rebuild trust; in the meantime others like Evian, Fiji and AquaFina entered the market.
Marketing is about generating value. It is a significant factor in all economies as it allows consumers access to valued, quality goods and services. In the midst of a trust deficit syndrome, being the most trusted brand in your competitive set is a big competitive advantage. Trustworthy Brand Value is a business management mindset. If you want to be perceived externally as a trusted enterprise, you must create a Trustworthy Brand Value culture internally.