What Is Value?
It’s a slippery issue: what is value? By this I mean, what is the value that a customer is willing to pay for? In my MBA’s marketing class, the term “value” is thrown around an awful lot, but it’s always left in intangible terms. Then again, is there really such a thing as tangible value?
When I go shopping, what are the tangible properties of an item I buy? The physical form of the product itself. Embodied in this physical form are explicit attributes, such as the function the product performs or how well it performs that function. But there are also a number of implicit attributes of the product that I’m also paying for: the “quality” of the product, the prestige of the product, and the convenience of where I bought the item.
The value of some of these explicit and implicit attributes can be measured quantifiably. For example, I can measure the item’s performance and then value that performance based on how much I might save in time or money by buying the item versus not buying it. I might value the item’s “convenience” value by determining the cost to me to buy a comparable item in another location.
But what about prestige? How do I value prestige? Prestige value is related to the way people’s impression of me is altered by me buying the item. But what is the value of other people’s opinion of me? If the item causes me to gain access to a new job, I suppose I could value it in terms of how my income changes. But that’s a tenuous link, one that hardly might only apply to an Armani suit, but not a pair of Converse canvas sneakers. So what’s left?
The issue that prompted this line of consideration was a business case we studied last term. In the case, BC Packers, a local salmon and tuna cannery, was considering entering the canned cat food industry. It had to determine whether to enter the low-priced segment, the national brand segment, or the premium-priced segment. What disturbed me was the fact that we could apply different values to exactly the same product. It didn’t seem reasonable to me that we should be able to, for example, charge twice the price for a premium brand as for a price brand, just because our advertising campaign tickled some endorphins from some single female in her mid-thirties who views her cat as a child substitute. Sure, we have extra costs incurred in the form of advertising, but was it worth that much?
Then I realized that the attributes I had deemed “quantifiable” weren’t quantifiable at all! Sure, they could be quantified in terms of money and time, but how could you value those things? If time is money, then the reverse is true, hence I’ve only quantified tings in terms of time. What is my time but a human perception of its surroundings; and what is my value of prestige but my perception of other’s value of me?
It would seem that “value” is a shorthand for perception and time. Our time is finite and hence so is our opportunity for perception. That leads me to believe that no matter what product we’re purchasing, the finite length of our lives means that we’re ultimately buying more time. Time to live. Time to experience. Time to earn an income. And, of course, time enough to buy more time. Hence, “value” ends up being a balance between our ability to pay and our desire to live our life more fully.
There is no logic to value. We pay what we’re willing and able to pay and no less.