With talks of tariffs that could lead to increases in stable prices, brands and retailers must ensure product’s features are communicated and are visible to the right audience.
During strained economic times, companies often lower prices. However, this tactic may no longer be an option. Strategies will shift based on the product’s value proposition.
A key part of marketing strategy, the product value proposition is a pithy statement explaining product benefits and the reasons why customers should choose it. As Warren Buffett simply stated, “Price is what you pay, value is what you get.”
The cost/value equation is an intrinsic part of the consumer’s thought process. The formula compares the perceived benefits of products to perceived costs and is used to decide what to purchase.
Value = Perceived Benefits – Perceived Costs
The price/value equation helps businesses stay competitive and identify growth opportunities, highlighting the importance of understanding the worth of purchases instead of focusing on price.
As a refresher, price is determined by supply and demand, changing with market conditions. It is the actual amount paid during the transaction. Value considers future benefits of owning something and is based on an asset. Perceived benefits include quality, service, brand, image, experience, functionality, and emotions. Perceived costs include inconvenience, poor service, limited choice, risk, related costs, lost opportunity, unexpected consequences, and price.
For example, when purchasing a portable speaker, choices are: rechargeable speaker (A) or a speaker utilizing disposable batteries (B). Product A is more expensive but is rechargeable. Product B is low priced. When analyzing costs and benefits, the price and availability of batteries vs. the increased price of product A are considered along with the value of rechargeable convenience vs. the inconvenience of product A dying without a power source, etc. Other factors include how it will be used and its durability; is there a chance of losing it? If so, inexpensive B might win out. If the price of B is low enough, it becomes disposable, leading the consumer to possibly purchase two or three instead of one product A. Now, the value has shifted.
Increasing the perceived benefits of a product and reducing perceived costs increases value. Successfully communicating value can often prevent a price decrease or aid in defending a price increase.
Communicating the reasons a product should be purchased above competitors’ and ensuring the best product visibility is critical. Prime positioning at the point of purchase and the point of sale provide opportunities to place products in front of customers.
Influencing buying decisions at crucial moments is vital to retail. This boosts sales and increases brand awareness. Utilizing point-of-purchase (POP) and point-of-sale (POS) displays will maximize retail space and capture buyers’ attention. When deciding the type of display to use, consider the look and size of the store or space where the product will be placed, potential customer engagement, and what design is best to communicate product features.
POP displays are key marketing essentials and feature products at the place where the customer is making a purchase decision, like high traffic pathways or showrooms. POS displays are located at the point of sale or checkout.
POP displays include cases, modular slatwalls, shelving units, signage and poster stands, and dump bins. Both value products and premium products are often placed in these displays. Specialty POP displays are often utilized for premium products. These include lighted glass cases that are sometimes equipped with digital screens, offering interactive features.
Perfect for last-minute impulse items or accessories, countertop POS displays are positioned at checkout areas, targeting shoppers’ attention during the final purchasing phase. Examples include acrylic countertop stands, rotating countertop racks, and cardboard displays.
Understanding the product’s value proposition helps a brand decide how to effectively place a product within the store. A premium product is a primary decision for the consumer; therefore, a higher-end fixture or POP is selected. The display focuses on the product’s features and benefits. To increase the sale, companion products and accessories (value products) are attached or placed nearby. For example, if the store’s premium products need batteries, the retailer places a POS containing batteries near the register. In turn, knowing that the battery with the highest value to the retailer will be selected for that prime checkout position, battery manufacturers design and package attractive POS displays holding multiple sizes of batteries.
When placing POP and POS displays throughout the store, consider what is best for the customer to help them make the best purchasing decision. Time is a cost. Saving the customer time increases the value of your establishment, resulting in return visits.
When prices increase across all product levels, companies must create value by explaining features and benefits while increasing product visibility. Effective use of POP and POS displays, informative signage, and prime product placement will keep products on a profitable path to purchase.
Editor’s Note: This column originally appeared in the April 2025 edition of Fishing Tackle Retailer.
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