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Marketing 101: Adding perceived value to an ordinary product

Marketing people know how perceived value can increase how much someone will pay for something. And the key here is "perceived". It doesn't have to be true, it just has to be something that people believe is true.

My favorite example is spinach, which everyone knows is so good for you because of the amazing amount of iron it has. But of course it doesn't have a lot of iron, that's just something that "everybody knows". Spinach is fine, but it's no miracle food. Go ahead and Google it, the boring facts are out there.

Getting an ordinary food to have an extraordinary reputation isn't done by advertising, it's done by public relations. A company can advertise all it wants about how its product is in some way miraculously better than other products, but that won't convince people. The trick is to get people talking about it. Nowadays this is done with social media, but it's always existed. People will listen to their friends more than they will listen to big companies. So, the goal is to get people talking about a product (in the marketing world it's called "buzz"), and then stand back and wait for the customers to pour in, shouting "Shut up and take my money!" When it works well, it's just astonishing.

There are lots of laws restricting companies from making unsubstantiated claims about their products, but there's no law against having a friend of yours tell you how great, for example, spinach is. But wait, it gets better...

Perceived value allows a higher price based on some other factor. It can be beer brewed with water only from Minnesota, it can be spinach grown only a particular way. Marketing people don't have to say that their product is better because it comes only from Wisconsin, it's just implied. And that implication is one of the keys to perceived value.

So the next time your friend taps you on the shoulder and starts giving you the latest "buzz" about an ordinary product, which has now been discovered to be extraordinary, let them do the sales pitch. If you argue with them, and show them research that disproves it, you're only going to hurt their feelings, or make them mad. But really, it's just marketing, at its very best.