Customer Value is all about Value creation. This is what we tend to concentrate on: the positive experience, delight, positive Customer Value. We forget that we must pay as much emphasis on value destruction also. Value destruction happens when a product does not work; a customer cannot get recourse to good customer service or getting warranty claims honoured.
I have written about Value destruction and how it can be turned into a Value creating opportunity. Value destruction assumes that value was or is available to you. Elsewhere, I have written about customer frustration when customers are value starved. But a more basic issue we as humans and marketers must look at is value deprivation. This is a new area which denies Customer Value to many customers. As marketing people, we must look at this area carefully and not just ignore it.
What happens when value is not available to you because of circumstances or because you have no control? And why is this important to companies and marketers? Very often, some people are deprived of common goods available to a higher economic class of consumers. Those who are being value deprived, used mud instead of soap; charcoal instead of toothpaste; having only one change of clothes instead of a wardrobe; no recourse to quality or even minimum education; not getting two square meals a day; having to work in someone’s house and being deprived of an alternative future.
Many of these can be converted into opportunities; small bars of soap, sachet shampoo, toothpaste, etc. Or products with fewer features and a lower price point. I will leave the reader to think through these.
A great example is Nirma. In India, before 1985, Hindustan Unilever’s Surf held the number one position in the detergent market in India. However, when Nirma Chemicals launched a detergent brand called Nirma, catering to the middle and lower middle-class customers, Surf was evicted from its number one position. Nirma catered to hitherto value deprived customers by giving them small size sachets at affordable price.
Soon, HUL realized that there were fragments of the market which were untouched by major detergent players in India and it came up with two low-priced detergents called Wheel and Rin to cater to the lower middle-class group. They learnt from value deprivation
Deprival value is based on the premise that the value of an asset is equivalent to the loss that the owner of an asset would sustain if deprived of that asset. So imagine the deprival value of a lost education or the deprival value of a lost or unseen market.
Much of this happens because people who can do something have closed their consciousness or trained it to ignore such things. Ayn Rand in 1966 wrote in The Voice of Reason: Essays in Objectivist Thought:
Men’s consciousness is the least known and most abused vital organ….the loss of control of one’s consciousness is the most terrifying of human experiences…and yet men abuse, starve and subvert their consciousness…She says this leads to the question, Who is to blame? All those that are afraid to speak, or who know better are willing to compromise, temporise and thus to sanction such happenings?
Why I mention this philosophical issue is that very often marketers feel they can get market share by doing things that are not in the interest of the customer, but solely in their own interest. They bury their conscious pangs. They cause value deprivation. An example is a large company employing cheaper processes that could cause environmental or health damage, or cheaper packaging that can be ecologically harmful.
Examples of Value Deprivation
Value Deprivation occurs when you are clearly eligible to be selected for a national team, but because of vested interests or quotas, you are not selected. Why is this important? Because you, who could enter a national team are in a sense a customer, but your value to the team is ignored and simultaneously your customer value is reduced or depreciated by not picking you for the team.
Yet another example is a worthy candidate who cannot get admission to a good school because of reservations. Or worse still, rich people who ‘bought’ admissions for their kids to the detriment of deserving but less connected candidates. This is a clear case of Customer Value deprivation for the deserving candidate.
An orphan, deprived of parental love is the case of value deprivation
A worker being paid less than minimum wages in cash by greedy industrialists who use their black money for this purpose and simultaneously deprive the worker of social benefits apart from paying lower than mandated wages. During demonetisation in India, these industrialists sacked the workers depriving them of jobs, the economy of growth; and then blamed their actions on the government. Had they been paying by check, this would probably not have happened. Value deprivation occurred because of their greed.
A poor guy who is unable to get recourse to justice or bureaucrats is value deprived. Do the clerks and bureaucrats notice this? Ray Fisk at Texas State University and others are working on preventing value deprivation through Transformative Service Research. This is aimed at given the deprived a fair shake to reduce their bad treatment by bureaucrats. An example is people going to offices to get social security and being mal-treated.
Value deprivation occurs when you live in a village in India, and have no opportunities. You reconcile yourself to this and do not want to do something or become someone. Then we in big cities wonder why these people are that way and not ambitious.
The worst example is the financial community who in their greed have perpetuated great value deprivation in the guise of value creation. By making people who were marginal buy homes with cheap mortgages without worrying about the buyers viability or the mortgage viability, they first deprived such people of long term value and peace of mind, and finally caused value destruction for them and society in a big way (value was destroyed for 6 million people who lost their homes and 8 million people who lost their jobs as an aftermath of the 2008 financial crisis. No financial company officer had any value deprivation from this crisis or went to jail). Did the marketing people think of this?
So what can we do?
The first and least is to become conscious and aware of value deprivation. Recognise it. Point this out in your circle of friends or your company.
Your innate ability may then suggest possible solutions for those you can impact, or those your circle of friends and your company can.
A focus on Value deprivation will increase value to people and society and improve the good and wellbeing of people all around.
Marketing people can look at their products that are deprived to people because of affordability, and they can come up with smaller sizes, lower-featured products for such people and bring them into their fold. This turns value deprivation into value creation for customers.
A great example is making cell phones available to hitherto deprived customers in India. It changed society. It changed marketing, it created opportunities for marketers to sell not only phones but other goods and services and it created opportunities for people who had been ignored and deprived in the past.
Making flights more affordable to those who could till then only travel by train, created huge airline markets. Reducing customer deprivation turned into customer value and created value for airlines. Opening rural airports or secondary city airports is an example of reducing value deprivation to the people of this city.
All this leads to reduction of value deprivation and increase value.
What can you in Marketing do?
I tell people that if you are a market leader with 30% market share, why are 70% of the population deprived of your product? What can you do to make them buy from you? What is your competition doing to prevent them from becoming your customers? How do you give your customers what they want, customer value?
You as good marketers trying to give good experience can take advantage of what I have said and create more customer value by looking at the deprived and reducing customer deprivation. You can grow your markets. Reducing customer deprivation can lead to disruptive innovation. Ignore customer deprivation at your own peril.