Beauty is in the eye of the beholder, the same applies to the value of products. A lot of the perceived value can be increased by small changes on your website. Which in turn can raise revenue and customer loyalty.
Here are 7 ways of increasing the perceived value of your client’s products & services.
Number #1: Raising the price
A study by Sánchez-Fernández, R., & Iniesta-Bonillo, M. Á. (2007) shows that the price of a product affects the perceived value of a product. This means that raising the price of a product can increase the perceived value of a product to your visitors. The amount that you need to reach the effect of an increased perceived value depends on the specific product or service. This can be discovered with qualitative research on the product level.
Like the writer of this study states:
“External cues (such as price, brand name, and store name) influence perceptions of product quality and value, and the price has a negative effect on a product’s value but a positive effect on perceived product quality.” – Sánchez-Fernández, R., & Iniesta-Bonillo, M. Á.”
An example of this concept in use would be with a peanut butter company. The company set’s the price of peanut butter at store A to 5 dollars and at store B to 2 dollars. The perceived value made it so that sales of store A were higher.
There are many studies on why this affects the consumer’s perceived value. Sánchez-Fernández, R., & Iniesta-Bonillo, M. Á. (2007) describe how perceived risk, internal reference prices, perceived store images and the concept of price fairness all affect perceived value effects of pricing.
When using prices to optimize the perceived value make sure you measure the effectiveness of a price change so you know exactly what price is most effective for generating the most revenue. You can do this on a product level by using pricing software to automate the process. When you have fewer products you can try testing what percentage changes have the best effect on the perceived value and revenue.
Number #2: Using product attributes
The study by Sánchez-Fernández, R., & Iniesta-Bonillo, M. Á. (2007) also describes that the perceived value of consumers is determined by three key factors.
- Links among product attributes
- Perceived consequences of consumptions
- Personal values of consumers
These factors all contribute to the means-end theory which explains how consumers perceive value based on their goals.
This study explains it like this:
“This theory posits that decision-making processes regarding consumption are influenced by linkages among product attributes; the perceived consequences of consumption; and the personal values of consumers. The central thesis of the means-end theory is that individuals are goal-directed and that they use product or service attributes as a means of inferring desired end state.”
To explain this concept further I will sketch a scenario. Imagine a user having the goal of cleaning a stain from a shirt that he or she cannot do with the currently owned laundry detergent. The consumer visits a website where he or she looks at different laundry detergents of the same line:
Laundry detergent 1:
- 50 washes
- Eco friendly
Laundry detergent 2:
- 50 washes
- Power cleaning
Laundry detergent 3:
- 50 washes
- Eco friendly
- Power cleaning
In this scenario, the study would suggest that the user would choose laundry detergent 3 because compared to the other product it has the most (1)positive attributes compared to the other products. Which increases the perceived value.
The power cleaning attribute would suggest that it’s stronger than other detergents for dirtier clothes which correlates with his or her goal of cleaning the nasty stain. This also increases the perceived value of laundry detergent 3 in this specific scenario because it’s (2)perceived consequence matches the consumer’s goal.
Finally, it is also eco-friendly which speaks to the consumer because he or she cares about the environment. Therefore matching with the (3)personal value of the consumer.
U can use these factors to influence the user’s perceived value by segmenting your users into persona’s that have goals. Consider product attribute relations between product groups and highlight attributes to match user segment goals to increase revenue. Finally, it’s vital to match attributes and product descriptions to the user segment’s personal values.
Number #3: Reframing the price
A journal by Shirai, M. (2017) about reframing describes three main tactics for raising perceived value.
- Temporal reframing of prices
- Measure-based unit pricing
Temporal reframing of prices
Shirai describes temporal reframing op prices the following way:
“TRP reframes the prices as smaller amounts based on time units consumers use in everyday life, such as “$1.68 a day” or “$11.68 a week.”
This works especially well for higher prices because it softens the blow. A lot of car companies use this strategy by offering lease contracts. A consumer is more likely to want to pay 350 per month for 3 years instead of 8000 right away.
Here is an example of IKEA using this strategy:
Measure-based unit pricing
Shirai describes measure-based unit pricing the following way:
“UP typically reframes the price per unit of weight or volume such as “$1.68 per liter.”
This makes sense at a gas station because most customers will buy a different amount depending on what they need. Nonetheless, it is also used for products that have a fixed volume when being sold and will achieve the same effect.
An example of this is how the gas company Shell offers different kinds of fuel when driving into a gas station:
The final reframing technique that Shira describes is usage-based:
“Usage-based UP, which expresses the price in cents or dollars per use (e.g., $1.68 per serving)”.
Expensive restaurants use this when serving high-end steak. A 300 dollar steak is a lot more appealing to customers when it is presented as 30 dollars per serving. The main point is to divide the price with a metric that is named after the way the user is called.
Another example of usage-based reframing is with printing. Usually, you will have to pay a certain amount per printed paper for example.
This journal from Shirai, M. (2017) describes how these three reframing techniques allow the user to see the price from a different perspective and therefore affecting the perceived value.
Number #4: Product bundling
A study by Naylor, G., & Frank, K. E. (2001) showed that product bundling can have a positive effect on the perceived value of products. They describe the following in their journal:
“Specifically, finds that providing an all-inclusive price package, even if the actual monetary outlay is higher, will significantly increase perceptions of value for first-time consumers.”
There are two main ways of bundling products. One way is to bundle single products and offer them for a lower price. This is called bundle pricing. The added benefit for the user is having a lower price than buying them separately. This is harder to make successful compared to the second way.
The second way is by offering bundles in a pure form. This way the users are not able to buy any of the products separately. From experience, I can tell you this is a lot easier to make successful. Test what has the most positive effect by disabling the single buy products for 50% of your users. This way you can find out what way of bundling has the most positive effect on your revenue.
Number #5: Good cause
An article from Causely describes how 80% of global consumers agree that business must play a role in addressing societal issues and that a lot more businesses give money to good causes.
A fact that is underlined by a study from Conecomm. Where the results show that 91% of global consumers are likely to switch brands to one that supports a good cause, given similar price and quality.
This is the reason why more companies are spending money on charity as part of a marketing strategy. The benefits simply outway the costs.
An example of a company using a good cause is Nespresso. By investing in sustainability when buying materials for their products they increased the perceived value of their products.
Test what good cause has a positive effect on your revenue and donate money to them for a win-win situation because of the increased perceived value or be altruistic and do it anyway!
Number #6: Scarcity
A study by Suri, R., Kohli, C., & Monroe, K. B. (2007) showed that using the concept of scarcity can increase the perceived value of products.
Investopedia gives the following definition of scarcity:
“Scarcity refers to the basic economic problem, the gap between limited – that is, scarce – resources and theoretically limitless wants. This situation requires people to make decisions about how to allocate resources efficiently, in order to satisfy basic needs and as many additional wants as possible.”
This means that you can signal a user that there is scarcity with text or images on a webpage. A well-known example is how travel companies push scarcity on their sales pages:
In their study Suri, R., Kohli, C., & Monroe, K. B. (2007) state:
The results also show that scarcity increased the perceived value of the low price product, but only in the low motivation condition.
In their results, they specify that a low price product is low when it is compared to products in the same category.
An example of this would be (again) a laundry detergent that is relatively cheap compared to the market prices.
Finally, we have to explain what a low motivation condition is. The research paper Suri, R., Kohli, C., & Monroe, K. B. (2007) describes it the following way:
“Consumers may or may not have a desire to evaluate the information in marketing communications, and differences in this motivation could lead to different levels of elaboration of the information.”
The research Suri, R., Kohli, C., & Monroe, K. B. (2007) then describes how consumers with a low motivation condition tend to process information heuristically because it takes less effort and capacity.
Scarcity will play into motivation by triggering people to see more task-related ques. Which makes them see more of the marketing communication that increases the perceived value.
So using it more for low motivated users that are looking at low price items can be beneficial to your company’s revenue.
Number #7: A great website
A study by Soltani, I., & Gharbi, J. E. (1970) showed that perceived value is increased when a user prefers a website. This means that the design of your website should match your target group’s preferences in order to make them like your website.
They state in their study the following:
“Results of this study indicate that the perceived value is a high telepresence and flow state-dependent; that perceived value generates loyalty; and that, similarly to Mathwick et al (2001)’s findings, site preference strongly impacts future patronage intent.”
This means that perceived value and site preference live alongside each other.
An exorbitant example of this concept will help you grasp the concept:
Most people would prefer any other website over this monstrosity because the design doesn’t appeal to them. Designing your website to look nice for your visitors is a basic but important factor when you want to increase perceived value.
This doesn’t mean that changing the design of a website rapidly to make it look nicer will increase conversions so make sure you implement the changes in small steps to make sure your sales don’t tank.
Perceived value is a broad topic and a lot of studies cover different ways of increasing it. You can use this as a conversion optimization expert to draft hypotheses on these studies as a means of increasing perceived value and revenue. Keep testing away with changes and raise the perceived value of products to the roof!
Sánchez-Fernández, R., & Iniesta-Bonillo, M. Á. (2007). The concept of perceived value: a systematic review of the research.
Shirai, M. (2017). Effects of price reframing tactics on consumer perceptions. Journal of Retailing and Consumer Services, 34, 82-87.
Naylor, G., & Frank, K. E. (2001). The effect of price bundling on consumer perceptions of value. Journal of Services Marketing, 15(4), 270-281.
Statistics Every Cause Marketer Should Know – Cause Marketing Statistics. (2020, 16 December). Engage for Good.
Suri, R., Kohli, C., & Monroe, K. B. (2007). The effects of perceived scarcity on consumers’ processing of price information. Journal of the Academy of Marketing Science, 35(1), 89-100.
Scarcity Definition. (z.d.). Investopedia.
Soltani, I., & Gharbi, J. E. (1970). Determinants and consequences of the website perceived value. The Journal of Internet Banking and Commerce, 13(1), 1-13.