Marketing 'Value' Can Make the Difference

NEW YORK ( TheStreet) -- You would think it's a given that companies know why their customers buy a particular product or service. Yet, often, they don't. It's important to know the correct answer to this question because business people who do figure it out can run circles around competitors who don't.

I was trying to explain this to an employee recently and drew upon my experience in the world of computer-assisted design, or CAD, software. CAD software is a commodity -- it draws circles and squares, creates cubes and cylinders, and does solid modeling. Back in the 1990s, AutoDesk ( ADSK) was the first really successful CAD software supplier to the small to medium-sized market. One of its product enhancements was an ease-of-use feature that could create a circle capable of spiraling, and the company marketed it that way.

Competitor Dassault Systemes' ( DASTY) SolidWorks took a different approach. It took the same feature and marketed it as an automatic spring creation tool. The value was that CAD customers could create springs quickly and, at the time, that was difficult to do.

Both companies had the same thing, but AutoDesk was stuck on viewing it as functionality, whereas SolidWorks marketed it as value.

The difference between mundane reality and the perception of value can spell trouble for a marketing-challenged company -- and opportunity for a skillful marketer. Long story short, in the late 1990s, SolidWorks passed up the chance for functionality marketing and took share from AutoDesk by promoting value.

Every company and entrepreneur has to figure out why customers buy their product or service. They don't buy it because it is plastic or square. They buy it because it achieves something. Look at the purchase through the eyes of the customer. Whether it's a computer, a car or a shirt, there is a vision in their mind of what they're getting when they buy it.

The challenge is to convince people that your product or service has more value than the money you want them to hand over.

I really like how Wikipedia nets out the concept of "value marketing." In fact, you can take to the bank what its editors say, including: "The key to deliver high perceived value is attaching value to each of the individuals or organizations -- making them believe that what you are offering is beyond expectation -- helping them to solve a problem, offering a solution, giving results and making them happy."