Understanding Value

When I worked in a manufacturing company that sold products through retailers we use to talk about the “last 3 feet”.

A common pitfall of businesses is trying to be everything to everyone.

That is, that the end consumer’s decision to purchase our product was finalised at the shop counter. Advertising, customer referrals and PR draw customers to a store to purchase products however in the last stages of the purchase the consumer could be swayed in the final stages of decision making.

To support our selling efforts, we not only extolled the value of our product to the end consumer, but also to the retailer. The value to the consumer related to the look, longevity and performance of the product compared not only the initial cost of the product but also the cost of using the product. (In other words cost of product plus cost of use compared to the value). The value to the retailer was a totally different proposition around margin, sales volumes and ease of sale.

Value is a subjective measure and highly dependent on the eye of the beholder. A common pitfall of businesses is trying to be everything to everyone. It is important to consider what your customers, whether they be end users, distributors or resellers, truly value and how that differs. So rather than concentrate on value to the end user, any company that works through a value chain needs to look at the value for each point in that value chain.

For the end consumer the product life, features and cost may be important tangible factors, but other factors such as product reputation, social status and “bragging” rights also are important.

For the retailer the benefit is in the stock turnover, the risk of obsolescence – not being stuck with product they can’t move, the margin, shelf space and so. Plus other less tangible items that are different to the consumer – how often will they get complaints, will the product attract other store traffic and so on.

If you moving a product through a distributor they may also think of things like the life of the product on the shelf, the cost to transport, your reliability as a supplier and even the amount of warehouse space your product takes.

Is all your marketing concentrated on the consumer in the hope that this will generate enough “pull through” so that your resellers have no choice but to go with your product? Are you differentiating your marketing and messaging so the different points in your supply chain understand the benefits you bring?