Value is Not Real

Marketing and more objective areas of business like finance or operations often butt heads over what is "important". I love what Rory Sutherland has to say here about the foolishness of thinking you can separate perception from reality. Our reality is shaped 100% by what we perceive and what perceive is 100% what we experience. In my many years in marketing I have heard more than once "Get rid of the fluff" and yet if Starbucks stuck to the facts told us all. "Coffee is coffee!" Coffee would still be fifty cents. Starbucks knows that they actually are ADDING value, when they tell you a story about where your coffee comes from. They know they are adding value by creating an environment that feels like the worlds most social living room. Is it fluff? Well, it allows them to charge $5 for a simple cup of coffee. 

So his points are worth remembering:

  1. Value is not real, it is perceived
  2. Persuasion is better than compulsion
  3. You can replace real value with symbolic value
  4. Value is contextual. Environment influences the value an item has

Watch his extremely witty talk, I promise you will at least get a giggle and for me at least just that is reason enough.