VALUE IS ALL IN THE MIND
As consumers we are constantly making sub-conscious calculations about the relative value of the innumerable options presented to us– choices about leisure activities, cars, clothes and computers. This is what drives our perceptions of ‘value for money.’
In the case of purchasing an airline seat the need to be satisfied is simple – to get from A to B – and the means of satisfying it is clear, along with all the attendant features, such as, seat size, location, leg room, etc. There is something OBJECTIVE about a seat on an airplane at a specific time to specific destination, but when it comes to a seat in a theatre at a specific time for a specific show the experience gained is almost entirely SUBJECTIVE.
The value gained from attending an arts event is entirely a function of perception. People exchange money for arts experiences only if they believe they are getting value in return. But what is that value? Economists use the term ‘utility’ or satisfaction of needs, wants or desires.
Attending an arts event is almost always like buying a brand-new product, which the customer has never experienced. In fact, the product doesn’t exist until you experience it; and even then that experience is almost entirely in the mind. So what we are selling is the expectation of value to be received. In effect customers are buying a PROMISE, which is why the communication of value offered by an arts event is so fundamental.
In marketing class we’re taught about the difference between features and benefits. It’s also why brands are so important in our sector. In a sense, brands are value; or rather they enhance value by communicating it more effectively. Branding should therefore be an ideal means of communicating (and thus creating) perceived value for the arts.
When making a purchase of a product or service, people frequently base their decisions not on the ACTUAL attributes of a product or experience, but on the information they have available about the attributes of a specific value proposition. Often that information is incomplete which leads to biased, or frequently irrational, decisions, especially with something as intangible as the arts. And as an arts marketer, you need to recognize that your patrons won’t realize the value they are expecting if they don’t know about it. And often we don’t communicate the true value (i.e. the art, the experience, the uniqueness). We talk in jargon which means something to us, but nothing to the patron. Or, we focus the conversation on price.
To put it simply: value not communicated is valueless. The corollary is even more powerful: The better you communicate the true value you offer – value as defined by the consumer - the more you increase that value, the more likely the customer will buy.
This is the fourth in a series of posts to be published by Americans for the Arts. We will be sharing our reading and research on behavioral economics to bring the new perspectives and generate debate about pricing for arts and cultural experiences.