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  • Writer's pictureRoisy Rickel

What is Value? The Case of Sugarfina

Updated: Jan 25, 2020

In the marketing world we define value as the relationship of benefits to costs, or what the consumer gets for what he or she gives. Dollars are our way of communicating value. While there are several pricing structures, the only true way to find the market price for a product is by quantifying value and translating it to price. But what makes one product more valuable than another that has the same cost of goods sold?

The Case of Sugarfina

Sugarfina is a vastly successful luxury candy store started by Josh Resnick and Rosie O’Neill in 2012, with their flagship store in Beverly Hills, CA. Sugarfina sells beautifully packaged 3oz cubes of champagne candy bears for $8.95. They sell at their own stores and other high end retailers such as Bloomingdale’s and Nordstrom. Meanwhile you could buy a giant bag of unbranded German gummies for a fraction of the price. So where is the value coming from? If people only buy when the sum of their gain outweighs the sum of their loss, what is their gain? Why will people pay $8.95?

O’Neil founded the company after realizing that, “there were really high quality candies out there, that had not been brought over to the US. Even in Europe, no one was doing this elevated presentation of what a sweets boutique could look like,” (MindMag).

Value is not derived by cost of goods sold. Price is an indication of value. Customers will only buy if they feel they get more value in return than what they give up.

Value added is the creation of a competitive advantage by bundling, combining, or packaging features and benefits that result in greater customer acceptance.

So what adds to a competitive advantage?

Creating a whole product.

  • Generic product: A version of the product containing only those attributes or characteristics absolutely necessary for it to function.

  • Expected product: The set of attributes or characteristics that buyers normally expect and agree to when they purchase a product.

  • Augmented product: The inclusion of additional features, benefits, attributes or related services that serve to differentiate the product from its competitors.

  • Potential product: This includes all the augmentations and transformations a product might undergo in the future. To ensure future customer loyalty, a business must aim to surprise and delight customers in the future by continuing to augment products.

(Source: Theodore Levitt’s The Marketing Imagination & Kotlers 5 Product Level Model)

For Sugarfina, the generic product is just the candy alone.

The expected product might be the candy, and some sort of carrying container, like a plastic sealed bag.

Added-Value is derived through the augmented and potential product phases. The augmented product might be the high quality candies they use, the beautiful packaging etc. Their candies are Non-GMO, contain no artificial flavors and are imported from Germany.

Where Sugarfina is really thriving though is through their potential product. Just as O’Neill described she wanted to create an experience for customers. From the displays, customer service, wallpaper, light fixtures, and website design, the entire experience shopping with Sugarfina is beautifully designed and seamless. They have shipping available to every state, custom bento boxes available, seasonal packaging for gifts and more.

So yes, you could buy a bulk bag of champagne gummies for a fraction of the price, but you cannot buy Sugarfina’s whole product anywhere else in the world.

Interior designers - What level of product are you offering to your clients? Are you pricing based off of your generic product, or you whole product? How can and do you deliver added-value in order to elevate your offerings to a whole product and give your customers a luxury experience like Sugarfina.


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