Are your Brands value for money?
Jennifer Millard
By Jennifer Millard

What is your brand worth?  Are you offering value to consumers and shoppers?  What indeed is “value”?


There is a simple equation to answer these questions, but first the proposition that value is relative. Three scenarios:

  • You are in the local pub with your friends. What is the most you would pay for a beer?
  • You are relaxing in beach bar on a tropical island. What would you pay now?
  • You are stranded in the desert and haven’t had a drink in two days. And now?

Without being presumptuous, I would suspect that in the last of these scenarios most people would re-mortgage their house, but would wince at £5 otherwise. The cost and the value of the beer in each case is therefore dependent on benefits accrued: relaxation or life! We can see therefore:

Value = (Benefits – Cost)

For the average consumer in their local supermarket or shopping online the choice is very unlikely to be this stark. They will look at a product, evaluating in a split second whether the benefits it provides at the price charged, gives them value for money. The tricky bit is understanding what the benefits are.

Mineral water is a multi-billion pound category in the UK, yet functionally the hydration benefits of bottled water are little different from those provided by Severn Trent. Packaging, carbonation and occasionally flavouring are the most obvious differences. To be justifiably able to charge more for a product therefore adding benefits versus the parent brand for NPD, or over competitors in a category, enables price to be taken, the importance of which was covered in “Price: Feel the Power”.

Consumers though will also have an emotional attachment to a product: they may buy it because their mother did; it meets their ethical standards; it reflects the self-image they wish to portray, etc. This is the power of a brand and which companies spend millions framing: “You’re worth it” or “Reassuringly expensive” for example.

So “what is your brand worth?” well the simple answer is whatever shoppers are prepared to pay for it, but as we’ve seen the value is relative. This is particularly true when a product is on promotion, since as the cost goes down, the benefits and therefore the value to consumers goes up. The size of the price drop will determine how much better value shoppers think your brand is, directly affecting promotional volume uplift.

An understanding of the value equation will not help you forecast promotional demand however, as doing this accurately, requires the ability to know, for example, previous promotional effectiveness or accurately integrate 3rd party data into your systems. Taking the value equation into account during the budgeting cycle or through JBP creation will though help in planning promotions that do not devalue your brand or the wider category. Further, knowing what consumers are prepared to pay, what and why they value your product, will also ease those tricky conversations with retailers as to why to your brand is also “reassuringly expensive.”

Jennifer Millard
By Jennifer Millard

Jennifer is AgilityWorks' resident Growth Hacker, working tirelessly with each business unit to bring you the latest and greatest technology and software innovations on the market. In her free time Jennifer is a keen cyclist, although she seems to spend more time falling off the bike than riding it.

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