The perceived value of products

The term perceived value describes how much consumers consider a product is worth. This value isn't always determined by the price or the actual cost of production, but rather by the subjective value that people attach to a good or service based on things like its features, advantages, reputation, and brand.

In order to determine the appropriate pricing and optimize their earnings, retailers and online retailers need to be aware of how their products are perceived to be worth.

Major Insights:

  • A customer's personal assessment of a product or service's value, particularly when compared to a rival's offering, is known as perceived value.
  • The price that consumers are prepared to pay for a good or service is a key indicator of perceived value.
  • A product or service's perceived value is often influenced and increased through marketing, which might highlight features like convenience, stylish design, or ease of use.

Elements that affect how valuable people assume a product is:

  • The product's own quality comes first. A product with superior quality is likely to be valued highly, and this perception may support a higher price point. Conversely, a product with lower quality would be thought to be of lesser value, which could lead to a lower price.
  • A product's perceived worth is also significantly influenced by its brand reputation. A well-known company like Rolex, which has a solid reputation for dependability and quality, is more likely to be valued highly, supporting a higher price. Conversely, a less well-known brand or a brand with a bad image can be seen as having less value, leading to a lower price.
  • Furthermore, how a product is presented and packaged can influence how valuable people think it is. An appealing presentation and thoughtful packaging increase the likelihood that a product will be seen as having a high value, supporting a higher price. Because of their reputation as a high-quality brand and the way they package their products, Apple is a great example of a company that embodies these values. Conversely, a product that is presented in an ugly or inadequately packaged manner could be seen as having less value, leading to a reduced price.