The amount of money associated with your industry obviously has a huge effect on your business. Naturally, this would have been considered at length whilst you understood the viability and potential in your business idea. The amount of money in your industry should of course determine your growth plan, the speed at which you are able to grow and may or may not have an influence on the amount of time it will take for your consumers to make buying decisions. However, the money in your industry will not only affect your business potential, it will also have a huge impact on your consumers and their expectation of value.
Value is almost more important than money itself when considering your business proposition and sales and marketing plan. Changes in the economy and your competitor behaviour will have had an impact on your consumers‟ perception of value and will determine what they are prepared to spend and what it is they will expect in return. As a business you will need to understand, in relation to the industry, how much value you offer your consumers and how you will meet their expectations based on this.
Key areas for Thought:
• How rich is the industry at the moment?
It is important to consider how much is being spent in your industry at the moment and understand whether this is because of premium rates or high consumer demand. You should also consider how much is being spent by your competitors on customer acquisition and retention and reflect upon whether or not you are well positioned to match this spend.
• How is this different to last year?
Change, and the rate of it, will affect how your consumers perceive value. For example, if, as a result of the economic downturn, there is a lower consumer demand in your industry, you may find that many of your competitors have lowered their pricing and/or increased the perception of value that is offered. If, for example, you are in a growing industry, having recently proven consumer demand and increasing your price point as a result, consumers may feel they are getting less value from your service and will need to be managed through the transition.
• What is money being spent on?
It is important to understand not only how much money is being spent in the industry but also precisely what that money being is spent on. This will allow you to further gauge and confirm what is currently of uppermost importance to your consumers and ensure you are aligned with their needs.
• Why are people spending money on this?
Understanding the drivers and motivations behind consumer spending habits is important for your business growth and marketing messages. Are consumers spending to:
• save time?
• for their health and well being?
• as a reward?
• to reduce costs in other aspects of their lives?
• to make a process or activity easier or for peer acceptance?
It is important to understand what is driving their need or desire for your products and services to ensure you can meet their needs and clarify that your benefits are aligned with this. As previously mentioned, the closer your consumers‟ needs and product or services benefits are matched, the greater the value associated with your product will be.
• What are people expecting from this spend?
The final, but arguably most important aspect of understanding the perception of value in your industry is to understand precisely what consumers are expecting as a return on their investment (be that time or money), it is essential for you to understand what they want in return and ensure you can deliver this as a business. This is the only way to ensure you will deliver true value for your consumers and continue to grow as a business.
This section will help you understand your own businesses theory of launch. It may be for your entire business or for a particular product or service that you are about to take to market. It is important that you read the section which is relevant to your ‘Gathering’ response. They will give you a clear understanding of how to create a strategy and thorough plan for the launch of your platform, product or service.
1. With a high price point and high value, your product or service is likely to be luxurious and desired by many consumers in the market. Their purchasing decisions are likely to be governed predominantly by their disposable income or access to finance. It is likely that your product or service will be a one off purchase and the buying decision will be well considered and influenced by a number of individuals within the buyers immediate network. Their decision is likely to be well researched and their relationship with your brand is likely to be strong. For them, this purchase is likely to have some emotional attachment and they will expect a premium service from your brand from their initial engagement with your brand through to the post sale customer care. Your audience is likely to span across a variety of demographics but the value attached to their purchase and the time it takes each buyer type to reach the buying decision will be influenced by their wealth, status and lifestyle choices.
2. If you are launching a business, product or service which has a low price point but a high value it is likely that you will need to create the impression of exclusivity or limited access amongst your consumers. Despite the low price point of your product or service it will have huge desirability and will be a key part of a consumer’s identity if it is something that is not available to everyone. To maintain this high value, it is unlikely that your product or service will be used by the mass market at all and if so it is unlikely to be for a prolonged period as the value attached to it is likely to decrease when this happens. Your brand, despite its price point, should be luxurious and exclusive and those who engage with your business should feel in some way honoured and privileged. The engagement is likely to hold an emotional weighting for them which will be created by the elitism associated with your product or service rather than the price.
3. A product or service which has a low price point and a low value to consumers may well be a mass market product and can create significant revenue for your business. However, it is unlikely that this product or service will require sophisticated branding or complex strategies. It is likely to be an essential product or service which many consumers will need in their daily lives. Purchasing decisions in this vertical are likely to be determined by cost and convenience to the consumer. Alternatively, you may have a product or service which has a low price point and still offers no value to your target audience – if this is the case we suggest you review your business to align your product or service with the demands of your audience.
4. If your product has a high monetary value but isn’t valued by your consumers it is likely that you will be offering a necessary product or service which will inevitably solve a problem for your consumer but is unlikely to create any emotional response for them and should be needed rather than desired. These types of products and services are often irregular purchases and are actively searched for based on a new consumer need. It is unlikely that you will be able to create this need in your consumers or influence the regularity of their purchasing. Their purchase behaviour is likely to be influenced by the reliability of your product or service and the trust they put in your brand, your core features, advantages and benefits or your price point.
These products and services are the most likely to be scrutinised by consumers who will be keen to understand the Return On Investment these products and services are able to deliver them to ensure their price points as justified.
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