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Thursday, March 22, 2012

Sorry, but J. D. Powers Missed the Point

Gina Pingitore, Chief Research Officer at J.D. Power and Associates recently reported that “While value is important, consumers want more than simply the lowest price or a product that is just good enough”. See: http://www.mediapost.com/publications/article/170230/50-brands-named-customer-service-champions.html?edition=44638#ixzz1pHnnE8Wi
 

With all due respect I suggest that there are several problems with her statement:

1) Like much of marketing research it tends to draw conclusions based on the belief that all customers are like some statistically “average” customer.  (Which of course we know most are not). 2) It confuses the terms “value” and “price”.  (“Value” actually is about the worth of a given product or service, while “price” has to do only with the amount of money paid.)

Consciously or sub-consciously every individual calculates “worth” in their own mind when they buy. They have different expectations of product requirements, desired service levels, and realities of what they are willing to spend. For some the price weighs heavily in that calculation. For others additional product or service components (be it style, convenience, miles per gallon, turndown service with a mint on the pillow, etc, etc.)  carry greater weight in determining what the experience is worth. You don’t need to take my word for it.  Consider studies of top retail brands that perennially reveal consumers giving top rankings to both Nordstrom and Costco.  If we all agreed on a single definition of value would we rate both a high service, high price provider and a low service, low price provider as our favorites?

Unlike the folks in Congress, behavior demonstrates that consumers understand that they can’t have it all, so they make  tradeoff decision.  To some consumers those value tradeoffs include the acceptance of long check-out lines, warehouse décor, no shopping bags, and limited staff, as long as the price is low.  For others personal shoppers, gift wrapping, and a piano playing in the background, even with higher price, is value.

J.D. Power states that Value is: a superior product, delivered in a compelling presentation, through a fast and easy-to-understand process, that is supported by responsive and concerned people, offered at a price that is “perceived as fair and competitive". Sounds great, but it’s just not that simple.

10:51 am edt          Comments


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