There’s an entire industry dedicated to staging vacant homes at the start of the sales process. Before a home hits the market, a staging company fills rooms with broadly appealing furniture and design accents to show off the space. Renting these items cuts into profits, so why do real estate agents bother? Because staged listings sell faster than vacant ones.
This is an example of perceived value. Displaying a king-sized bed in a primary bedroom can significantly increase the property’s appeal. Ecommerce merchants can learn from this practice. Of course, the product is important, but the way customers experience it as they contemplate a purchase can make or break a sale. Here’s what you need to know about perceived value.
What is perceived value?
Perceived value—sometimes called customer perceived value—refers to a customer’s overall opinion of your product before and after the purchase. Although price can influence a customer’s evaluation, perceived value accounts for the entire scope of the customer experience.
Perceived value begins with marketing and continues after purchase. A customer is more likely to consider a product worth the expense if they derive pleasure from owning and using it. Customers may consider how well the product meets their needs, how desirable it is, and their overall impression of the company.
While the monetary value of materials is fixed, the perceived value of a product varies. Brands have the ability to influence the public perception of their products with marketing strategies like brand messaging, packaging, and design. External factors—like the performance of competitor products and public customer reviews—can also influence perceived value.
An example of perceived value
Le Creuset and Lodge both manufacture large, colorful Dutch ovens. Both companies are over a century old and they use the same basic materials in their products—cast iron and ceramic. However, major differences emerge when you compare prices. A six-quart Lodge Dutch oven retails for around $80, while a similar pot from Le Creuset will set you back over $400.
A Le Creuset Dutch oven is a status symbol. They’re manufactured in France, a country known for its culinary culture, and were the favorite pots and pans of pioneering celebrity chef Julia Child. Today, they’re still prominently displayed in cooking videos and recipe images from prestige publications like Bon Appetit and The New York Times. All of these elements create social appeal and increase how much potential customers are willing to pay.
On the other hand, Lodge, an American brand, often markets its products as the perfect vessels for camping trips. Although they offer virtually the same product, Lodge’s focus on a rugged lifestyle alters its products’ perceived value. This isn’t inherently a bad thing—Lodge products have a positive reputation, and they’re able to appeal to consumers with less disposable income. But some consumers are willing to pay a premium for products from Le Creuset due to the brand’s higher perceived value.
How does perceived value drive customer behavior?
Customers are willing to pay a higher price for products with a higher perceived value because customer behavior isn’t exclusively rational; many consumers act on their emotions. Regardless of the actual cost to produce an item, a company’s products may have more value in the eyes of customers if they convey luxury or evoke a certain lifestyle. Emotional appeals are a vital component of perceived value. An emotional connection with a brand or a product can help customers justify purchasing a more expensive product.
What key factors determine perceived value?
- Brand messaging
- Product design
- Product pricing
- Competitor offerings
- Social factors
- Customer testimonials
- Customer experience
Customer beliefs are informed by multiple aspects of marketing, product design, and experience. Here are important factors that contribute to a brand’s perceived value:
The messaging strategy you use to describe your product sends a message to consumers. For example, when emphasizing cost as a value proposition for a low-priced product, using words with a negative connotation (like “cheap”) in marketing campaigns may imply that the product is poor quality. Using a more positive word (like “savings”) could be a better way to represent the product’s appeal.
For goods purchased on online sales platforms, unboxing is often the customer’s first in-person interaction with the product. Well-designed, high-quality packaging can make this a positive experience and create greater perceived value. You may choose to improve the unboxing experience by creating custom boxes, including decorative elements, or adding supplemental materials like tips on how to use the product.
Offering signature colors or adding unique design elements to your product can influence how people perceive it. A product that suits a customer’s taste can offer emotional benefits that increase its value to the consumer. Items made of expensive materials, like copper or marble, are often perceived as higher quality.
Price can influence how your product is perceived and what customers expect from it. Competitive pricing can make your product seem like a good deal. On the other hand, entering a luxury market can be a way to reframe the cost of more expensive items. Setting a high price can give customers the impression they’re indulging in a high-end experience, but can also raise expectations for product quality and performance.
Charm pricing, a strategy in which brands choose odd prices, can make a product seem more affordable. For example, a product that’s $19.99 may seem more affordable than a $20 product, even though they are effectively the same price.
Consider your brand’s target audience—including their estimated budget—before choosing a pricing strategy.
Competitor positioning—comparing your brand to rivals—can also affect how customers feel about your product. Consumers often compare products before making purchasing decisions; if your competitors are significantly more or less expensive, their pricing may affect your product’s perceived cost. Consider competitor offerings when deciding how to frame your product or service, and emphasize features that set it apart.
Socially responsible companies may appeal to consumer values. For example, companies that donate a portion of profits to a relevant cause can make customers feel good about their purchase, contributing to the overall experience and encouraging repeat purchases.
Your company’s reputation can make your product seem more or less desirable. Companies with a solid reputation for producing quality products are likely to have a high perceived value.
Products with social cache—status and prestige within a group—are also valuable. To increase your cool factor, consider partnering with industry influencers to get your product featured on social media or pitching writers to get your product featured in service journalism pieces.
Customer testimonials and online product reviews can provide social proof of your product’s value. Including reviews from happy customers in marketing materials can build consumer confidence in your product.
The customer experience with your product after purchasing affects its perceived worth. If the item does not meet their expectations or the delivery process is difficult, it can lower their opinion of the product. Satisfied customers are more likely to make another purchase.
Perceived value FAQ
What is customer perceived value?
Customer perceived value refers to the customer’s perception of your product, including how desirable it is and how it meets or exceeds their expectations. It’s separate from the actual value of a product measured in dollars and cents.
How do you use perceived value in a marketing strategy?
Marketing teams can use copywriting language and design to influence a product’s perceived value. They may aim to increase perceived value by positioning their product as a luxury item or emphasizing its benefits relative to competitor items.
What are the benefits of increasing perceived value?
If customers perceive your product as high value, they may be more likely to choose it over a competitor brand or to pay a higher price. Increasing perceived value can generate more sales and develop a strong brand identity.