Daily Podcast: The Value of Value
A friend of my father's taught me there are only three markets: price, value and quality. Price-driven consumers want the lowest possible purchase price, period. In car terms, they want to pay as little as possible for a vehicle. Everything else is secondary. If the car falls apart, if it loses them money in the long run, it doesn't matter. Manufacturers catering to these customers need not concern themselves with anything other than purchase price. At the other end, quality driven car customers want the best car, money no object. Manufacturers catering to quality-seekers have a [relatively] easy time. All they have to do is secure the world's best talent, give them the resources they need and not get in their way. Value-driven customers balance price against quality. Automobile-wise, they want as much of everything as they can get– economy, features, safety, ride, handling, resale, the whole schmeer– for as little money as possible. Manufacturers aiming for value-driven customers are fighting an endless war against everything: low-end carmakers aiming high, high-end carmakers aiming low, direct competitors, production costs, fashion trends, technological innovations, you name it, they've got to sort it. Like Icarus, the one thing they must never do is fly too high. Ford GT. Chevrolet Corvette. The new Saab Turbo X, Mitsubishi Evo and Toyota Land Cruiser. If a consumer says, wow, that's a lot of money for a —–, it's a clear sign that a value-oriented car brand is shooting itself in the foot. Short term, it can work. Long term, it's a big mistake.
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