In this episode of Pricing College – Joanna and Aidan talk about 5 value drivers to consider when selling anything. They take the example of a TV set.
TV watching is still a common pastime – even if it is now more Netflix than broadcast channels. However, when selling any item – what are the common value drivers that should be considered?
The TV set has technical criteria that customers want – but we explore other value drivers that may be less obvious.
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TIME-STAMPED SHOW NOTES: 5 VALUE DRIVERS
[01:30] Technical aspects are always important – but there are many more things to consider.
[02:30] Joanna believes that the size of a TV set is of prime importance in Australia.
[03:05] Re-badging is very common in the TV industry – but is your TV a status symbol? Most people pay a premium for a brand.
[03:40] Joanna focuses on warranties and guarantees relating to the brand.
[04:30] Does the store actually have stock? Will you wait a month or will you pay more to take it away now?
[05:10] Does the TV fit with another tech in your house? Does it integrate with Apple or Google, etc.? And is there after-sales support?
[06:10] Is your customer an Apple or an Android family? The product also needs to fit into your “ecosystem.”
Today we’re going to talk about value. What are the 5 things should you consider about value when you’re setting prices? Now, value can be quite an ambiguous term.
So, we thought that today, we’d go through an example of pricing a TV set according to its value. And when we say value, I think we’re referring to customer value: how customers buy and perceive the value of this particular TV set.
Yes, we want to give an example of the COVID and lockdowns etc. Certainly, people know about the TV set and the value it provides. But we’re going to give an example of stuff you should be considering that isn’t exactly the size, the technical specs, or the TV set. Other stuff that customers will value, but then you have to put yourself in that mindset to think of them and explore them.
Yes, I’m not saying that technical aspects and visuals are not something that people do consider. They do when they buy, but that’s only one tiny aspect.
So, we’re just going to explore some of those other aspects that could be tradeable. It could be some of those value at risk principles that we touched on in earlier episodes.
That’s exactly right. When you go to buy a new TV set or any electronic product, really, there are certain things you look at. You probably want to know the colour of those sort of aspects that it will fit inside your house. Or that it has the latest technology and it does everything right.
But there are other things you’re also looking for. So, we’re going to do five things to consider. Again, Joanna’s drawn the short straw, so she has to cover three. And we’ll kick off with number one.
Okay, I’m going to do the simple one as we’ve sort of touched on it already, just looking at some of the specs.
Look, I know these are not some of the things we want to emphasise. But I have noticed in Australia that people do like big TV sets.
So, we can’t ignore the fact that the size of the TV set in Australia is quite important. It’s much more important in Australia than it is in the UK as TV sets there are small.
So, compared to here, I don’t know though. What, 50 inches? 60 inches long? Some of them, they’re huge. This is quite commonplace now. So, that would be considered some of the sort of more tangible aspects of a value driver that people buy TV sets based on their size.
Yeah, true. Second, what I’m going to go with is the branding.
So, I think a lot of people probably recognise that manufacturing has been outsourced in many industries. So, when it’s a rebadging principle, you could buy fundamentally the same television set at very different prices with different logos or badges.
But when people come to visit, when family and friends come to your house, if they see a more prestigious brand, (such as Sony, LG and those sort of things) they might think you’re a better person. Ridiculous as that seems, they may do so and you may have to value that. So, people may pay a premium for a nicer brand.
When I go into the shop to buy a TV set, which I’ve done fairly recently, I’m not a big expert on TV and I’m quite a risk-averse buyer. But I want to know about the guarantees. Are they extensive guarantees or one year warranty? I’m worried about whether it’s going to break down or if I’ve made the right decision. What if there’s a problem and I can’t fix it or someone comes to help?
So, those types of aspects guarantees, warranties are really important to me when I buy a TV set.
I just follow up on that point. It certainly is and even in Australia, the Harvey Norman store offers a lot of their computer programs and systems replacement warranties. And this is a very valuable thing.
Okay, onwards to my next one, which I think is point number four and deliverability. Is it actually in stock?
If anybody has been shopping over the last few months, in 2020, you’re probably aware that stock is highly volatile. Shops may have the systems you’re looking for, or they may not.
So, when you’re looking to buy a product like a TV set, are you prepared to wait a month? Or do you want it right away to take away in your car? It’s that sort of availability and deliverability options that can be very valuable.
Here’s the final point that I often think about, especially nowadays with the advancements in technology:
Does this TV fit with other systems that I’m using, i.e. Netflix?
Does it fit with my surround sound? Things like that.
Is it easy to use?
Product innovation is also useful. And because I’m not very good at that sort of technology side of things, I want to know:
Is there any system support?
Is there anyone I can call?
Perhaps that can help me with some of these integrations between systems. So, those types of things I’m looking to as well.
I think in Australia, there used to be the concept of a Holden family or a Ford family. And people were aligned with those brands. I think you could almost argue now, that you’re a Samsung or an Apple family or an Android versus Apple Mac family.
And fundamentally, if you’re trying to sell a TV set to somebody, it’s important to know what systems they use:
Do they use Chrome?
Do they use you know Google Home etc.?
And if they do, they’re almost certainly more likely to be Pro. For an Android stroke, a Samsung style television set versus one that’s more aligned with Apple. So, those things should be considered and it’s the ecosystem I think is the term used.
Products we buy now are not stand alone. They fit into wider ecosystems and knowing about that will help you sell.
I suppose this comes down to people buying TVs based on brand. But what does that brand power mean? It’s because these companies made brands that were reliable that you could trust based on all these different value drivers that we’ve just looked at. And literally, they just ticked the box on that.
Over time, we’ve just got used to accepting that client value from certain brands. We should never ignore the fact that underneath those brands, there is still innovation in terms of product innovation.
But there’s still, I think a lot of brands now need to rearticulate the value that they already deliver to their customers – and just remind us sometimes of why we buy.
Yeah, I don’t have very much left to add. All I know is when I choose a TV set, I want the biggest one possible because it makes me feel more important.
And it’s also great that you have a salesperson that can just hone in on all these sorts of key questions that the customer may have in the store. It’s because these things are on our minds. And asking the customers the right questions can bring out these value drivers and help us select the right TV set for us.
But anyway, yeah. I think hopefully, this example has helped unpack customer value. And this logic and framework can be applied to all products.
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