What Does Value Really Mean?

Firstly I want to make a clear differentiation here between shoppers and consumers, and my constant frustration that these words are used interchangeably!  The shopper is the person buying the goods/service, and the consumer is the person (or animal!) that consumes/uses the goods or service.  Now whilst they may be the same person in some circumstances, we believe that the shopper is the consumer (or part consumer) for around 40% of items bought in food and grocery, the shopper mind-set and the consumer mind-set are distinctly different. 

Let me give you an example of a shopper buying something for their own consumption, they will consider three main elements when choosing an item, do I need the product, what is the quality of the product and what is the cost of the product.  The proportionate function of these elements creates the individual value of that product.

Now if for a moment we say that every item chosen is needed in some way (or at least the shopper thinks they need it) as they are unlikely to buy a product they know they won’t use, then we are left with a simple equation;

So if we use this equation in its simplest form a rise in the quality in a product should see an equal rise in the price of the item. If a product is perceived to be of better quality (Quality is by definition subjective), then a shopper would imagine that its cost would also be higher.  Therefore when an item is seen to be of higher quality, but at no higher price, this is seen as good value.  Value is not therefore just something that is seen to be cheap!

The question then is, does everyone buy every product based on value? Now at first glance one might hypothesise that they do, as a more affluent shopper may be more willing to spend more money on a higher quality product, but of course as quality is a perception this may not always be the case. 

Let me give an example of rice.  A shopper may consider that this item is a commodity in nature, and there is no difference between the quality of products on offer (therefore the quality element of the value equation is a constant). In this case, the cost becomes the primary deciding factor - a decision that is easier to make with only one comparative criterion. Whether the shopper is affluent or not, it has no real impact.  But, an affluent shopper may decide that buying a more expensive product will only cost them more money; there is no risk risk that they may be wrong, because in theory rice may be better quality at a higher price. They have nothing to lose (only money!), but this then represents poor value of a product if the increase in cost does not lead to an increase in quality.

For less affluent shoppers, the cost element of the product may be a constant.  For example they may set a price at £1 for a loaf of bread, they accept that this restricts the quality of the product based on the value equation, if a product that was previously out of their price range (and perceived quality range) but if this is reduced to conform to their budget, this would be seen as good value.

In the main, irrespective of affluence, shoppers make decisions based on value.  Value is not the cost alone, one must consider the quality element too!