perceived value

Since all value is only value when it is perceived as such, it must seem unnecessary to write about 'perceived value'. Is there any other type of value? Obviously a value is not a value unless it is perceived to be one. No matter how real a value may be, it has no value at all until the value is perceived.

The whole purpose of salesmanship is to help people perceive values that are 'real'. Of course, the same skill can equally be applied to getting people to perceive values that are not real. As one person's assessment of real value may be very different from another person's, it becomes very difficult to draw a line between effective sales talk and conning people. Even an important area like insurance has many options.

Should a husband buy life insurance? Should a wife? What about a single person? When life insurance also becomes critical illness insurance (the 'living needs benefits' concept) there is clearly more perceived value for a single person. Yet in a country like the UK with a National Health Service system, there may be much less need for funds to cover the cost of a serious illness. Expectations can vary. Does the single person expect to have a family some time? The assessment of risks varies enormously between individuals and families and age-groups. So also must perceived value.

MAD COW DISEASE
An insurance company in the UK started to offer 'mad cow disease' insurance following the considerable publicity over a suspected handful of cases. Beef consumption went down. Yet the chances of dying from mad cow disease have been estimated at being 30,000 times less than the chances of dying from smoking related illnesses. But people still smoke. Insurance companies would be less enthusiastic about offering insurance against these illnesses.

If you buy a lottery ticket and your number does not come up, you lose. If the lottery works by having you choose a set of numbers, then the perceived value is very much greater. First of all, you are exercising your choice. Whatever the basis for this choice, it is still better than just being given a ticket. Even if you only get one number out of five right, you feel some sense of achievement. If you get three numbers right, you feel that you are half-way to winning and surely next time you will do better?

Enthusiasm for this type of lottery system depends largely on the public's ignorance of mathematical probability. In a sense the public is being conned. Is that a bad thing? Is it morally acceptable? The point is a difficult one. To be sure, the lottery organisers make a lot of money out of the deception. But the lottery players also get much more enjoyment through their lack of mathematical sophistication.

There is this difficult question: is it permissible to fool people for their own good?

PLACEBO REACTORS
We know that 33 per cent of people are what is called 'placebo reactors'. This means that if they feel something is doing them good, it will indeed do them good.

If I sold you pills made out of starch at a cent each, the pills would not do you much good. But if I sold you exactly the same pills at $100 each, then 33 per cent of people would find that the pills did them a lot of good. Of course, I would be making a lot of money out of the deception. But without that deception the pills would not do you any good.

The basic moral principle is that 'the end does not justify the means'. We are rightly wary of breaching that principle for fear of all that could follow. In the case of the lottery and the placebo pills, one objective is to make money for the organisers, but another end is to make the buyer happier or better. Even if we only take this second end, does this justify deception as a means to that end?

REAL VALUE
The simple answer is that it cannot. In practice, however, we claim that the buyer is actually buying the 'real' value that is being perceived.

A person who always buys designer label clothes may actually believe that these are better made and that the style is attractive. More often the person is buying the image of the label and the prestige of being allowed to buy oneself into a more elite group. The confidence that may arise from the flaunting of the designer label is a genuine value that affects the person's behaviour and even success. The use of expensive clothing to indicate success to others is also a genuine value.

EMPTY VALUE
Napoleon's habit of giving medals to troops instead of extra money gave him the value of saving money, but also gave them prestige. All sorts of honours provide the same sort of value, both in terms of self-image and also the effect on others. An empty value is no longer an empty value if it affects things.

Sometimes people are blackmailed into becoming spies. Sometimes they spy for money. In some cases, however, the money seems very little in return for the risks incurred. In such cases it may be that the self-image of 'being special' is the perceived value. You, the spy, are more special than everyone else sitting around you in a restaurant.

At one time 'Reject' shops sold goods which were imperfect and had therefore been rejected - for example, a dinner service with one chipped plate. The perceived value for money was therefore high. Such shops now stock goods which are in no way rejects, but the aura of perceived value remains.

Matching real value with perceived value is very difficult either way. Perceived value is sometimes higher than the real value, but also sometimes lower. Someone who may think nothing of spending £30 on a meal is quite reluctant, all the same, to spend even £20 on a book. Yet the meal is soon over and done with. The book may change your life - and can also be passed on to someone else.

Category pricing means that people expect to spend a certain amount because of the category. So a diner expects to spend £30 on a meal, even if it is not very good. Spending the same amount on a book, even if it has lasting value, seems far too high because of category pricing.

CHANGING PERCEPTIONS
Wine makers know that screw cap bottles are better and cheaper than the traditional cork. Yet it is impossible to change to such caps. It may be because buyers would equate screw caps with inferior wine. It may be because the whole event of wine drinking requires the cork.

How can this be changed?

1. It is possible that the transition could be made if the screw caps were very expensive in the first place - for example, enamelled. If such caps became collectors' items, than the transition might be accomplished. Here the changed perception, from seeing screws as less desirable to more desirable, is an example of the direct blocking of the 'cheap' image.

2. We might go in exactly the opposite direction. We could sell exactly the same wine at two prices: £12 with the usual cork and £10 with a screw cap. People would now set out to convince themselves that the cork was not that important a part of the event of wine drinking.

3. Another approach would be an education campaign to show that corks could go bad and could leak, whereas screw caps could not. This would be less effective than either of the other two approaches - making screw caps either dearer or cheaper - but could be combined with either.

It is almost impossible to delete or block a perception pattern. Another pattern needs to be set up to lead values in a different direction.

In countries not affected directly by 'mad cow disease' beef consumption nevertheless fell by association. In the UK, which was so directly affected, consumption recovered when there were drastic price cuts. If there are competing perceptual value patterns, we tend to go with the one we prefer and rationalise the other one away.

LASTING PERCEPTIONS
On the whole perceptions do not atrophy. Nor do they require constant reinforcement. Once a perception is established it tends to remain in force until it is specifically removed. For example, when I give a taxi-driver my London address, most drivers comment: 'Edward Heath lives there.' In fact, the former British prime minister was only at that address for a brief period - and that was almost thirty years ago. Since nothing had happened to remove that perception in the meantime, the perception survived intact.

The most difficult perceptions to change are those which re-inforce themselves. A husband suspicious of his wife will selectively perceive those things which fuel the perception. That is the basis of most successful belief systems. Belief guides perception in such a way that it reinforces the belief.

It is usually much better to start a separate parallel perception than to try to change a perception through head-on engineering.

Considering the huge importance of perception we have done very little about it. This is partly because perception lies in the area of water logic or flow logic rather than rock (identity) logic.