1. -WHITE PAPER-
Is your price premium still
justified?
The revival of the Value-For-Money
model: identifying how close to danger
your brand is - and how to save it
Are you losing market share? Are you suffering from private labels
or low-end competitors? Has your churn rate gone out of control?
Has a substantial increase of your production costs positioned
your price setting offside?
Plenty of examples feature brands experiencing difficult times
while their customer satisfaction is still high. Others show brands
with strong brand equity and product superiority being
cannibalized by private labels. We even see consumers switching
to cheaper alternatives with which they are actually not really
satisfied.
How can we explain these evolutions? How can we prevent them?
How can we help you to get back in the game?
This is when the Value-For-Money model comes in useful.
2011 Keystone Network 1 The revival of the Value-For-Money model
www.keystone-network.com

2. The Value-For-Money line
In the original Value-For-Money model, the price the customers
think they pay is confronted with the value they think they
receive. Perceived price and perceived value meet on a fair point
on the Value-For-Money line.
• Originally, the concept was created with the purpose of
assessing whether or not an organization had obtained the
maximum benefit for the products or services it provided.
• Today, most marketers tend to abuse the expression ‘Value-
For-Money’ to merely designate a low-end proposition.
“The concept of It is observable that none of these two definitions actually
Value-For-Money correspond to the modern-day marketing challenges. The concept
of Value-For-Money has gained a new, useful application, due to
has evolved. In the changing consumer and the varying competitive
today’s context, it environment.
has gained a new,
useful application” How brands evolve on the Value-For-Money line
Modern-day consumers live in a world of perpetual choices.
• They trade up and trade down based on personal state needs.
“I don’t mind paying more for a better service” Versus “I don’t
mind the service being poor as long as the price is really cheap” are
quotes of consumers justifying their choice of Air France or Ryan
Air for a specific travel need.
• They challenge the brands and form their own opinions,
constantly questioning the value and price of products and
services. This phenomenon has evidently been accelerated by
the crisis, as well as by the accessibility of comparisons through
online resources.
2011 Keystone Network 2 The revival of the Value-For-Money model
www.keystone-network.com

3. • Simultaneously, low-end propositions have slowly gained in
quality, both actual and perceived, which makes them
increasingly taken into consideration by customers.
• The regular rise of raw materials costs as well as inflation
increase products prices while the perceived value is not
necessarily evolving.
This obviously affects all brands in their relative position on the
Value-For-Money model: a new player offering a decent
“Brands constantly proposition for a cheaper price can provoke a change in your
move on the model: brand’s perceived value.
This shows how, suddenly, your brand can get expelled from the
do you know where
Value-For-Money line, due to a new issue: an unjustified price
yours is now?” premium.
An unjustified price premium represents a huge
danger for a brand
Within this context, even loyal customers are reassessing their
loyalty paradigm, based on a comparative evaluation of cheaper
alternatives.
In any cases, your brand needs a real, relevant, valuable
competitive advantage, making the price gap worth it. If not, your
brand is facing a real danger, and probably loss of market share.
2011 Keystone Network 3 The revival of the Value-For-Money model
www.keystone-network.com

4. How to reach back to the Value-For-Money line?
It has become very common for brands to reach a decentralized
position on the Value-For-Money model. A diagnosis then
becomes worthwhile.
A strategy bringing the brand back to a relevant Value-For-Money
level by working on price and/or value perception, should be
planned.
Decreasing the price perception:
• can be achieved through an actual price decrease as like Ikea
dared to do recently. An adaptation of your brand’s codes and
signals through all customer experience touch points can
accomplish the same goal. For example, through a less
“Brands are luxurious look, a more aggressive promotional policy and/or
communicating the use of a new, lower-end channel.
about their price
and value through Increasing the value perception:
all touch points.
Excellence and • can be achieved through a tangible improvement of the
consistency of the product or service superiority. In most cases, an important
exercise on the perception is required, aiming at repositioning
customer the product, service or brand in a more valuable way. Once
experience are more, communication is key and has to be dramatically well
necessary.” managed in order to play a positive role: defining the right
brand personality and tone-of-voice, finding the right balance
between creative idea, choice of media, short-term sales
objectives and longer-term value creation.
In both cases, consistent communication through all touch points
has to play a key role in re-setting your brand on the Value-For-
Money line.
Market research can be of solid help in the process of re-setting a
fair value justifying your price premium: realizing an audit of your
brand, validating the potential of your brand vision as to create
sufficient value, identifying the gaps, defining the right
personality and communication style to adopt and emotions to
induce.
And, of course, pre-testing your communication campaigns to
assess their potential to meet their image objectives.
2011 Keystone Network 4 The revival of the Value-For-Money model
www.keystone-network.com

5. Where on the Value-For-Money line do you want
to situate your brand?
Brands of all pricing levels can be situated on the Value-For-
Money line, as long as they offer a fair ratio between perceived
price and value. All brands with a clear, steady organic growth
belong to this category.
In our model, three relevant levels are distinguished:
• The low-end part represents Best Deal Brands. These brands
offer low-end pricing. Lidl, Kia or Ryan Air can be categorized
“Brands of all as Best Deal brands. Besides the price, a decent perceived
pricing levels can be value is also necessary to make sure the Value-For-Money line
Value-For-Money. It is met. Ryan Air achieves this by focusing on relevant benefits
is not about being such as punctuality.
cheap, it is about • The middle part is where Win-Win Brands are represented.
offering a fair ratio These brands offer a competitive advantage, which is clearly
differentiating as well as creating value for the customers fata
between price and reasonable price. Easyjet is a successful example of a Win-Win
value” brand.
• The superior part represents the Passion Brands to which
marketers often aspire but which are the most difficult to
achieve. Most of the brands currently losing market share used
to be Passion Brands. Unfortunately, these brands did not
succeed in keeping enough perceived value to justify their
(increasing) price premium. Achieving the status of Passion
brand can be realized through the demonstration of a clear,
important product superiority, or through a powerful
emotional bonding with the customers.
2011 Keystone Network 5 The revival of the Value-For-Money model
www.keystone-network.com

6. Conclusion
Evolving competitive environment can be synonymous with the
need to regularly re-assess your brand’s situation, as to make sure
its price premium is under control and still justified by a fair
perceived value.
By not doing so, managers of underachieving brands take the risk
of not having identified where the real problem lies.
All touch points play an important role in price and value
perceptions. Hence, more than ever, a crucial need for excellence
and consistency in customer experience and communication is
required.
About Keystone Network
Keystone Network is an international and independent qualitative
research agency.
We deliver Strategic Results and Inspiring Insights to help to
strengthen the competitive edge of your company and your
brands.
We literally live with your customers: we meet them, we
communicate with them, we visit them, we accompany them, we
observe them. We transform the findings into actionable results
to help you throughout your marketing process.
About the author
Emeline Mettavant is Research & Account Manager within the
Keystone Network team. Through her 7 years of experience
Emeline has developed a passionate focus on brand management
and communication.
Are you curious about how your brand is performing on the
Value-For-Money model?
Do you have any questions or remarks?
Emeline would love to hear from you:
emeline.mettavant@keystone-network.com
2011 Keystone Network 6 The revival of the Value-For-Money model
www.keystone-network.com