Price, value...and desire

3/21/2011

We’ve been hearing a lot lately about value. As in, with the recession still fresh in their minds consumers are basing their buying decisions on value.

And by value, we don't mean price. What we mean is, yes the no-name ketchup is cheaper, but I love Heinz ketchup and the extra money it costs to pay for Heinz ketchup is worth it.

That kind of value.

We’ve been hearing a lot about value because it’s the new sweet spot for manufacturers and retailers. If shoppers perceive you offer value, they’re going to buy your products, or be more loyal to your store.

With that in mind, there’s an interesting new study on value that’s worth checking out. It comes from the market research firm Millward Brown and examines which brands have the best value of all.

Millward Brown compared 7,000 brands around the world. It tried to gauge how desired each of these brands are by shoppers and then measured how pricey they are. The company gave top scores to brands that are desired by consumers and are also affordable.

As Millward Brown is owned by an advertising agency, it also came up with a catchy name for this scoring system: the Value-D score. (The D, of course, stands for desirable.)

So which brands topped the list. Globally Amazon ranked No. 1. But in Canada Maxwell House came out on top.

Maxwell House? Well, yes. Think about it. The brand has pretty good recognition (thank you Ricardo Montalban!) , but it’s not usually the most expensive coffee on the shelf.

Other CPG brands that cracked the Top 10 in Canada: Nestle Pure Life (No. 2); Nescafe (No. 3); Real Canadian Superstores (No. 8); and Aquafina (No. 9).

Globally, CPG brands with the best Value D score included Colgate (No. 2); Pampers (No. 4); Coca-Cola (No. 6); Nescafe (No.9) and Lidl, the German limited assortment grocer (No. 10).

I wouldn’t take these results as definitive. For example, why isn’t Walmart showing up here?

Still, it’s a reminder that price isn’t enough to get shoppers to open up their wallets most of the time. By Millward Brown’s calculations, only 7% of global consumers buy on price alone, down from 20% a decade ago.

There could be several reasons for that. A larger global middle class, for instance. Yet it's true that people are more brand conscious and think certain brands have more value and are worth the extra money.

One more assertion from Millward Brown. Brands that have high desirability also have more flexibility in their pricing–in good times and bad.

That means while any brand–retailer or manufacturer–should be competitive on price, it's really desire that gives the biggest bang to the bottom line.

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