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This is the second part of my deep dive into value. I recommend you read Part I of Value in Design before this so you can get the most out of this article. Check it out here. This blog article will focus on how we can manipulate the value ratio outlined in part one to create better design solutions for our clients and businesses.
Previously on Value In Design
I took the seemingly subjective view of value and broke it down into categories so we can discuss value in a more objective way. This is so you can understand purchasing decisions, linking to real consumer insights on how they perceive the value in your design.
Understanding value in this objective way allows us to build design parameters based on these consumer insights and their perception of value. As a result, you should now be able to improve your ability to discuss and manipulate value in your design, focusing in on values that resonate with your consumers.
Now we are masters of discussing value in an objective way, it’s time to focus that knowledge into manipulating the value ratio to improve the perception of value in the eyes of your customers. There are five primary ways to manipulate the value ratio for the better:
Function increased / cost decreased
Function unchanged / cost decreased
Function increased / cost unchanged
Function increased / cost increased; and
Function decreased / cost decreased
Some of these are easier to achieve than others. In the following section, I will break down these five methods of manipulation, with an example for each. In an ideal world, I would have liked to have found product examples within the same brand or business, but most of this work is done behind design studio doors, so isn’t available to the public. I’m still not 100% sure about some of these examples, as I don’t have access to company’s costs and design processes, so if you think of any better examples, please drop them in the comments section below.
Function Increased / Cost Decreased = Increased Value
Reducing cost doesn’t always mean reducing the price. Cost is how much money it takes for you, the business, to make the product. Price is how much the consumer pays for it.
The money saved from reducing the cost can be added into the profit, or reinvested into further development of the product or its packaging. Similarly, reducing the cost doesn’t always mean a reduction in function.
This is probably the most difficult method of value manipulation to achieve, but it can be done. Remember, consumers pay for value of the benefits of the product, not the products cost.
An example of this can be seen in the shaving market. Harrys, an online shaving subscription service, offers more value to a consumer than more traditional options available in high street stores, with the ability to have products shipped direct to your door, with everything you need for a decent shave. Subscription services are also a great example of instilling customer loyalty, but that’s a talk for another time. Harry’s reduce their cost due to the fact that they own the blade factory that they use to create their razors. The increased function to the customer is the subscription service that Harry’s offer.
Function Unchanged / Cost Decreased = Increased Value
Just like reducing function doesn’t mean that the cost is automatically reduced, reducing the cost doesn’t always mean that the function has to decrease. The two can be influenced by each other, but can also be independent from one another.
Cost can be saved in many ways: renegotiating a better price with your supplier, changing supplier, reducing overheads, using a different type of material... These kinds of cost-reducing measures sit outside of design, but as production technology and efficiency is always improving, there will always be a way to create a better design solution without affecting the functionality of the product. Think about being as efficient as possible with your packaging design, for example, to decrease costs in materials, waste and shipping. Or looking at the problem that the consumer is facing with a fresh pair of eyes.
This was a tricky one, but I’ve come up with this example, it takes some explaining, so bear with me: menstrual cups versus tampons. The product function remains the same, but the cost is overall reduced, as the manufacturer is making less individual items within that product category. For example, menstrual cup manufacturers reduce their cost from the amount of moulds that they need to create their products - usually, there are just three sizes of menstrual cup, compared to the number of moulds needed for creating the variety of tampons available today. It’s part of a greater social, technological change in the market, and there is an added value from the impact to the environment, reducing the amount of materials used in the manufacturing process, and the complications of the disposal of tampons.
Function Increased / Cost Unchanged = Increased Value
It’s important to remember that when adding new functions, they must be perceived by consumers to be adding value. These must be communicated effectively to the consumers through marketing and packaging design. This type of increased value is common among commodity products, such as cleaning products ⎯ there’s a seemingly endless stream of new formulations which help improve the product in some way.
One of the best examples of this type of value manipulation is with antiperspirants. A new production technique has recently hit the market, compressing the contents of antiperspirant cans, allowing the producers to sell the same volume in a smaller, more portable can for the same price. The cost to the manufacturer is unchanged, due to the technological advancement negating the cost saved from the minimal reduction of the materials for the now-smaller can.
Function Increased / Cost Increased = Increased Value
When adding functions to a product, it’s necessary to ensure that the consumer will perceive to be adding value. Sometimes, the customer will be willing to pay for that added value. The key to achieving this is to have a deep understanding of your consumer perspective on value, and what they actually want to achieve with your product. You must know your customer to know what they want.
An example of this is the difference between a bar of ordinary soap and an electronic soap-dispenser. The added function of the ‘no-touch’ soap-dispensing combined with the use of technology increases the consumer’s perception of the hygiene of the product, which they would be willing to pay for.
Function Decreased / Cost Decreased = Increased Value
The most common way to reduce cost is by removing function. This is often known as ‘value products’, which aim to reduce or eliminate functions that have high costs. It is all the more important with value products to manage customer expectations through marketing and packaging to ensure that your consumers don't feel like they have been missold a product.
The simplest way to look explain this method of value manipulation is in the kitchen utensils market, where there are levels of value. At the top, you have designer labels like Alessi, in the middle of the value range, there’s OXO Good Grips and Joseph Joseph, and at the bottom of the value product range, there’s own-brand products, like Tesco.
Poor Value Options
The remaining combinations of the value ratio will give you a poor value outcome, and should be avoided at all cost. An example of this is the now infamous chocolate Toblerone, which changed the product volume to reduce cost, which ended in public ridicule. Don’t reduce the function for the same cost: don’t do a Toblerone!
Now you know the possible ways to manipulate the value ratio for better results. This final section gives you some food for thought, with a few prompting questions and ideas to consider, empowering you to squeeze every last drop of value from your product for your customers.
Increased Product Function
Can it be simplified by splitting functions?
Can a function be removed or combined?
What does the competition do?
What do they do in adjacent categories or sectors?
Reduce Part Cost
Read up about your production processes, constraints and cost drivers.
Reduce the amount of production steps to make your product.
Use standardised parts, across products and ranges.
Think about the detailing required in your products parts.
Reduce Assembly Cost
Minimise complexity, combine parts.
Single axis assembly, reduce orientation changes.
Do your parts self-align?
Are there any tools needed to assemble your product? Consider making that process simpler, and think like IKEA: consider end user assembly.
Reduce Production Support Costs
Minimise the indirect costs and overheads.
Reduce supplies, processes, parts, number of supplier: this is called systemic complexity.
What is your proofing process? How are you going to ensure that the factory follows your assembly instructions?
Now you feel empowered you to better manipulate the value ratio to enable you to create better products for your consumers, clients and buyers. In the two parts of this blog article, I have outlined a trail of easy-to-follow breadcrumbs that you can adopt in your own product design, starting with a detailed understanding of categories and linking that to real consumer insights, and how they perceive value when making a purchase decision. You can now use these insights to manipulate the value ratio to better serve your consumers with designs that fully resonate with them.
As a graduation present, below I have created another link to a high-res PDF of my nudenotes research I made in preparation for writing this two-part blog, which you can download for free.
Don’t want a free download? Here is are my nudenotes research for just this article.
If you have any questions, leave them down in the comments, and I will answer as many of them as I can. Stay tuned for more blog articles on principles of creative business.
I also wanted to say a massive thank you to all my sources of inspiration: The Futur Team, packagingsense.com, which is a great packaging blog by Lars G Wallentin. Plus the countless books I have read over the last few years, especially Creative Strategy and The Business of Design by Douglas Davis. Not forgetting my old university lectures on design in business.