Perceived Value: Winning In The Age Of Amazon

Low price point market share is on the rise with channels such as Amazon advocating for these products. How do you maintain your EBIT in a market that allows for low-cost items to meet user’s needs? Perceived value.

Amazon is winning on products that are use-case specific. The Amazon consumer now thinks differently than those who used to shop brick and mortar. These consumers do not carry high expectations when using these products. They are satisfied with a product that fulfills the specific use case at least once. Consumer’s perceived value of these low price point products is the bare minimum. Low expectations = Low risk. For example, a shirt may be bought on Amazon for a specific occasion for less than $5 USD and if that garment rips within five washes, the consumer would not be too worried as they can buy another for the same price, and have it delivered the same day. How does this translate into the likes of high price point items or luxury goods such as Louis Vuitton?

Louis Vuitton, Gucci, Burberry, MCM Worldwide, Supreme, and Off-White are all brands we recognize as luxury goods within the fashion industry. Globalwebindex.com shows us that millennials are the biggest spenders when it comes to luxury goods, but millennials are only making an average of $42,000 USD per year. (Buckle) So why is this? Perceived value. See I believe the luxury fashion industry is a prime example of the power of perceived value. Louis Vuitton targets 35-54-year-old wealthy women, yet we see the correlation of millennials spending the most money within this industry. The perceived value these millennials have from Louis Vuitton’s target audience is why they are spending the most money. Louis Vuitton knows if they were to target the lower middle class, they would not be able to return the same EBIT as they are right now. So how do these brands have such a reputable perceived value?

It is ironic as these brands use outlets that relate most to those who are spending the most money within the industry, although they are targeting a more well off consumer. We see these brands present in channels such as organic and paid social media, organic and paid search, influencer, and brand collaboration all backed up by content marketing. The perfect combination of conveniently placed and in your face advertising brings the value of these brands to a peak. So what does this teach your brand?

The perceived value of what you are providing may not be the function of the product, but the status, confidence, and emotion of being a consumer of the product. A Louis Vuitton wallet has the same function as a Travelambo wallet on Amazon, but is a $390 USD difference in price. That added value is in the status of owning a Louis Vuitton wallet, the confidence you have in others who own a Louis Vuitton wallet, and the emotional attachment the consumer has with buying a Louis Vuitton wallet. Brands that are providing more than just a functional product need to convey this message to their consumers through outlets that are relevant. Some of these outlets may include social media, search engines, email, and branded websites. (Stay tuned for another article on why influencers are the future of social media marketing) Brands have complete control over how a consumer perceives the products. So how are you going to portray your brand?

Sources:

Buckle, Chase. “The Luxury Market in 2019: Consumer Trends and Behaviors.” GlobalWebIndex Blog, 27 Nov. 2019, blog.globalwebindex.com/chart-of-the-week/luxury-market-2019/.