As marketers, we know how customers are never “just” buying a product (or service). When navigating the market, customers are looking for solutions. Products, in fact, can be considered nothing but solutions to problems besieging our lives.
The more benefits a product provides, the more valuable it is perceived.
As customers go to market and explore purchase options, different companies will compete to serve them, through the value that their product is able to offer. The fact is that customers don’t buy products, but invest in value.
Value is a bit of a buzzword in business, as it is used extensively, but it is not always easy to actually define it or describe it in more minute detail.
In this post, we are going to break down customer value into its essential components of benefits and limitations that customers assess and evaluate based on their needs.
With no further ado, let’s delve into the topic.
Customer Value: Explained
What is value? How can it be defined? Value is not only comprised of benefits, it is actually a tradeoff.
Well, customer value is comprised of a set of benefits that your fashion brand can provide and a set of sacrifices that your customer has to make in order to enjoy the benefits provided by your company offerings.
Benefits represent the “proactive” reasons that explain what customers will get from acquiring a specific product or service. Each individual benefit is a point of preference, that can potentially prompt customers to prefer a brand over other ones.
However, we should keep in mind that there are multiple types of benefits, and benefit categories that can be associated with a product.
We can divide and classify benefits into two groups: functional and non-functional benefits.
Functional Benefits of a Product\Service
The academic definition of a functional benefit has to do with the product’s attributes and how they are able to provide consumers with functional utility.
For instance, I buy a high-power drill to put a shelf on my wall.
In this sense, a benefit is something that is able to allow customers to successfully address a problem or situation they need to overcome. These benefits can be intrinsic, as the garment’s fabric, or extrinsic as its traceable supply chain.
Non Functional Benefits of a Product\Service
Non-functional benefits connect to what we can usually identify as a social or emotional reward that the customer accesses through the product.
For instance, I buy a tuxedo to show “belonging” at a gala dinner. This would be an example of a social benefit.
I buy a sports car to feel younger. This would be an example of a psychological\emotional benefit.
These non-functional benefits can be further divided into more specific categories, such as psychological, sensorial, symbolical, social, or connected with self-identification.
Let’s look into them in further detail:
These benefits are mostly connected to the five senses. E.g. I buy a particular brand of clothing because of how the silk feels on my skin.
They can mean different things to different people but mainly relate to a specific element of heritage, nostalgia, national belonging, status, etc. E.g. I use sneakers to show that I am still young at heart.
These benefits have to do with the self-image of consumers and help them strengthen their sense of self, for instance, a hypebeast brand for someone who considers him\herself a fashion victim.
These benefits relate to the psychological sphere of customers. I buy a particular product, as it has that sense of nostalgia, reminding me of a fun time of my life.
They serve as an opportunity to “fit in” or “stand out” in their respective group or peers. As we discussed before a tuxedo can be a way to “fit in” with a group, and a brightly colored scarf can be a way to stand out on a grey winter morning.
In terms of developing a marketing strategy, communication experts tend to simplify these subcategories into three main “jobs” that customers want to get done through Jobs to Be Done Theory, which we’ll be discussing next.
If you’d like to read more on this topic, this article is addressing in further detail the functional, social, and emotional benefits customers are striving to access in the market.
Jobs to Be Done and “Customer Jobs”
The benefits we have listed relate to many different aspects of desirability that customers may find in our products. The fact is however this may be difficult to do as it’s not always a certainty that brands and companies fully understand how their customers are going to use a product.
The more companies are able to understand what specific uses and benefits customers are looking to satisfy, the more they will be able to communicate product features that matter to the customer.
If you’d like to explore more the theory of Jobs to Be Done, in this article we’re delving into the topic in further detail.
Customer’s Limitations and Sacrifices
As customers ponder an opportunity to buy a particular product or service, they consider some of the limitations or “sacrifices” they may need to make in order to access product benefits. Value, as we’ll discuss in this paragraph is a combination of benefits and limitations that come with each product. After having discussed the types of value that customers buy into, let’s now look into sacrifices.
The most immediate form of sacrifice is usually connected to money. In order to buy a product, I need to dispose of a scarce (as in limited) resource, such as my own money.
Aside from money, however, there are many other sacrifices to consider. Some relate to the time customers invest in acquiring information, some have to do with search costs, some relate to the risks customers take when pursuing a specific consumption choice, etc.
All of these elements weigh in the calculation of the costs and sacrifices that are associated with the product.
This is why, ultimately, the specific combination of benefits and limitations connected to a product or service is what we call a value proposition.
As a result, companies compete in the market by providing products and services that are comprised of a unique set of benefits and limitations. These benefits and limitations together comprise the value perceived by customers.
Great! Now that we’ve covered all relevant topics, it’s time to draw a few conclusive remarks.
Now that we’ve discussed in more depth the concept of customer value and customer sacrifices we can understand how companies approach the market by competing with products and services, by focusing on the unique value proposition they are offering to their customers.
This value proposition is comprised of the unique combination of benefits and limitations that each product\service is delivering to the market.
In the fashion industry, identifying the value that your brand is bringing to market is essential to market your products in the most effective way.
If you’re interested in learning more about the Fashion Industry, don’t hesitate to take a look at our course “The Fashion Industry: Explained”. Our in-depth class covers a wide range of topics spanning from understanding fashion customers and markets to developing immersive retail experiences for your customers. Here’s a link to the course, if you use the discount code BLOG20 you can access a 20% discount. Enjoy!