I recently saw a series of terrific TED talks by Rory Sutherland.
Throughout his talks, he repeatedly emphasizes on the perceived value.
He argues, the actual/absolute value of any product or service almost doesn’t matter as when compared to how people perceive it.
The 2cent coffee you drink at home is exactly the same as you get at Starbucks for $4. Atleast, you can agree it’s not 200 times better as the costs suggest.
Similarly, he also points out that not more than 17% of people can distinguish between different types of wine, thus merely assuming it to be incredible as the price on the menu goes up.
We, as humans, make decisions emotionally. We don’t have spreadsheets in our mind, nor do we do financial analysis vigorously before buying a product.
So, both marketing and advertising should focus on this aspect.
Apple, Nike, Starbucks, Zappos and Google are pioneers in creating exactly that.