THE BLOG
10/23/2009 05:12 am ET | Updated May 25, 2011

Consumer Spends When Value Exceeds Price

The consumer will spend money when the perceived value of your offer is greater than the value of their money. Retailers and businesses will only succeed in this economy when they are able to validate that the value of their product exceeds the value of money. Not even the nastiest of recessions will stop the American consumer from spending money. Spending is instilled deeply into the psyche of Americans and it will take more than a recession to stop this propensity to purchase.

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While spending will be reduced due to bad news, lack of credit and unemployment it will not be eliminated. Those that prove successful in selling their products and services will focus on value not price. Even emotional, nonsensical purchases will be made when value exceeds price in the buyer's mind. Whether it is a new roof, kitchen, vacation, pair of True Religion jeans, Cartier Watch, HCG injections, an automobile purchase or employment when the value of that purchase (or decision) makes more sense than the value of the money the action to purchase will be made.

The challenge for retailers is two fold;,
1) finding out who has the need,
2) doing a great job at building the value proposition.

Neither of these two skills has been needed for years. And do not confuse value with lower price they have nothing to do with one another. Lower price will not get the job done in this market, only the value justification proposition will!

Cash for Clunkers is proof that people not only want to spend but will even make long-term commitments when value is perceived. The saving rates in this country has now reached the highest levels in 25 years, so don't believe the argument that people don't have money. The consumer today has more money than a year ago but is being more selective! While the consumer is motivated to save money the desire to spend money runs deep in our culture. Businesses that stay in contact with their customers and truly know how to make the value-add proposition will continue to sell their products.

This truth will hold true no matter if you are Tiffany's, Wal-Mart, Gap, Apple, iPhone the automobile dealer, real estate agent, a small business owner and even applies to the 26 million that are looking for a job!

The media freely delivers you all the bad retail sales numbers, facts, figures and projections but offer you no solution. Those companies and individuals that are able to justify that the value of their product or service exceeds the value of money will succeed. Lowering your price will not be successful if you are unable to show that the value of your proposition exceeds the value of money.

Grant Cardone, Sales Expert and Author of Sell to Survive