The search for value for money
Customers are obsessed with it and companies are harassed by it, but how exactly do we define value for money? The recession saw a change in the way customers spend money. This heightened price consciousness within the market place is as a direct result of two factors: Circumstance and Information
While some customers are no longer in a financial position to flash-the-cash, savvy-shopping is just as much a consequence of education, awareness and pressure. Having been bombarded with information about excessive price-tags and Celtic Tiger whimsicality, frivolous spending is frowned upon and customers feel the need to justify their expenditure to avoid being deemed an outlandish-shopper. This has seen the rise and glorification of value for money – but what does it mean?
Here in RED C, we continuously receive quantitative and qualitative feedback from customers in their search for VFM and it’s clear that value for money is inextricably linked with quality. Shoppers are willing to pay extra (however little that may be) when they feel that this additional spend provides them with a higher quality purchase. Of course, this theory works much along the same lines of the law of diminishing returns – at some point, the benefit will not outweigh or equal the cost and, consequently, customers will draw their purse strings.
This week saw Tesco’s Food Sourcing Director, Matt Simister, slamming UK customers for their perceived fussiness by claiming that ‘[customers] always pick the cream of the crop’. According to the supermarket, customers opt for aesthetically pleasing produce; contributing to mountains of waste. This suggests quality is also being tightly monitored by customers and that the parameters for qualifying as such are shifting. The story is certainly echoed on this side of the Irish Sea; expectations are much higher and shoppers are demanding more for their money.
This undoubtedly leaves customers at the helm of VFM. Perceptions and opinions are consistently evolving and, as a result, what is deemed VFM is unfixed. The advice for companies is to keep their finger on the markets pulse so as to truly understand their customer and what value means to them.