How Do We Measure Value?
How Do We Measure Value?

One of the most consistent questions we here at Fresh Squeezed Ideas receive from our clients is, “What do our consumers value?” The answer is… it depends. The question we should be asking is “What is truly driving a decision at the moment of purchase?”

Take the example of a global restaurant that conducted research to find that consumers valued having healthier options. Thinking healthy product innovation was the key to their success, they created a healthy options menu. Yet when it launched, it wasn’t as successful as research had predicted. Sure, consumers valued healthier options in an broader sense, but is that the frame of mind they are in when making decisions at that particular restaurant? What do consumers truly value from that experience? It’s perhaps not the healthy option it’s the feeling of nostalgic comfort they get from eating a good ol’ fashion burger and fries.

There are few blanket statements about what consumers value it is complex, multi-faceted, and contextual. In an earlier blog, we go into depth explaining how we can unpack these complexities using Codescaping, a powerful tool that uses both behavioural science and anthropological techniques to reveal what “matters” to consumers in a particular category. The Codescaping method solves an important piece of the contextual puzzle — what is the brand’s relative positioning within the broader category on key attributes in the mind of the consumers? Equipped with this insight, the next question becomes — how are these key brand attributes being activated in the moment of making the decision?

The in-the-moment value judgments consumers make are difficult to capture in traditional surveys and focus groups. Ask someone if they like ice cream and they’ll likely say yes, ask them if they want ice cream on a cold day, and they’ll likely decline. Point is, when you ask consumers their values directly and out of context, you don’t always get the answer you need.

That is why at Fresh Squeezed Ideas, we strive to engage with consumers in context, observing all the elements of how value perception is built and decisions are made. If we were to simply ask someone to reflect on why they would purchase something, it triggers System 2 thinking — the rationalized, slow, and conscious processes. It would fail to capture implicit or contextual behaviors and pain points, missing the big picture and ultimately leading to flawed executions. Instead, we use creative ways to mimic real-world decision-making contexts (think, observational shop alongs, priming, and behavioral audits) in order to tap into System 1 thinking — the fast, associative, unconscious decision process that plays a big role in shaping our value perceptions.

The power of the decision context makes context the perfect thing to manipulate when thinking of execution strategies and increasing value. System 1 relies heavily on cues from the environment to allow the fast and automatic decisions to be made. Using System 1, consumers look to reference points to help them form value perceptions. This is especially true with price. By controlling the reference point consumers use to measure value, we can influence value perception as well as purchase decisions. One example involves using a decoy. Let’s say you were at the movie theatre and wanted to buy some popcorn. Your options are: small for $3, medium for $7. Which is the best value to you?

Pop Corn Prices $3.00, $7.00

Now, let’s introduce a decoy and see how it can influence value perception. Your options are: small for $3, medium for $7 and, our decoy, $7.50 for a large. Which option do you see as offering the most value?

Pop Corn Value / Prices $3.00, $7.00, $7.50

Perhaps you see value in the large popcorn for only .50 cents more than the medium? By introducing a third decoy option, we can control how one values the cost and benefits of the offering and, therefore, influence purchase decision.

So what is value? Well, just like value is heavily contextual, so is the answer to the question. The answer changes depending on what you’re talking about. I value the unparalleled flavour of Häagen-Dazs ice cream enough to spend upwards of $6.99 on a small tub, and I will still run with excitement to buy an overpriced swirl ice cream cone from the ice cream truck. That’s what value is it’s malleable and heavily shaped by the situation.