In Ellsworth County , we understand the values of community, family and quality education for your children. In fact, we’re committed to them. For those considering relocating to Ellsworth County, you are eligible to apply for a free lot for residential construction, downpayments assistance and various fringe benefits and services throughout the cities in the county.
— Ellsworth County
Economic Development Inc.
Ellsworth County, Kansas? Values? Free land? What’s going on here?
We hear a lot about value these days. We seek ways to “add value” to products and services. We shop where we find the most “value.” We want to get “market value” when we sell our property. Is Ellsworth County attempting to “create value?”
So, what is this thing known as value, and more importantly, how can one influence the value of something?
Value is “a fair return or equivalent in goods, services or money for something exchanged,” according to the lead definition in “Merriam Webster’s Collegiate Dictionary.”
For our purposes, let us just say that something has value when it has worth. It is really quite difficult to find something that has no value whatsoever.
As real estate appraisal instructors like to say, for anything to have value it must have DUST — demand, utility, scarcity and transferability. If we want to influence the value of something, we must exert some influence on one of these components of value.
Demand occurs when someone wants what you have. Sellers often try to increase the demand for their product or service. Here are five ways to influence demand:
• Increase the size of the marketing area. If more potential buyers know what is being sold, there will probably be more demand.
The Internet has been a good tool for micro-enterprises to expand their market areas. Two years ago, I met a former college professor who said goodbye to academia and became a rafting guide in the summer and an alpaca sweater-maker in the winter. She said because of the Internet she can sell her expensive hand-woven products to people around the world.
• Reduce the price. If you sell your product or service for less than your competitors, and customers perceive the same value — there’s that word again — they will beat a path to your door. Also, reducing the price usually decreases the marketing time required to sell.
• Add incentives. From the customers’ point of view, there may be added value if you throw in something else of value. The whole concept of affinity marketing, where the buyer gets something extra for doing business with a certain seller, is really about adding value.
States, cities and counties across the country are coming up with numerous incentives for companies and people to move to their states, ala Ellsworth County.
• Decrease the supply. Assuming that the law of supply and demand is really true then all you need to do is offer less of the product or service and there will be more demand. This is true if you are the only one offering it. If customers can go somewhere else, then supply is not effectively decreased.
• Create demand. Many sellers believe that it is impossible to create demand. Perhaps they should look at the things people are buying these days that they really don’t need or did not know that they had a need for.
I’ll start the list with cellular ringtones, DVD players in vehicles, 50+ cable channels, bottled water and illegal drugs. Demand can be created by announcing a price increase, causing customers to buy before the price goes up. Celebrity endorsements often have the effect of creating demand.
One of the better ways to create demand is to make customers feel that they are part of a special group.
Putting it all together
Utility is the ability of a product or service to fulfill a want or a need. For example, a knife is used to cut things. If it won’t cut, it has very little utility. If a service provider does not do an adequate job, then there is little utility. If the cell phone doesn’t work, then it has no utility, and therefore no value.
Scarcity is the relative lack of supply of an item. If something is free, then it has no value. Does that mean that the land they are offering in Ellsworth County has no value? Actually, the Ellsworth County land is not really so free. There are conditions. You must live there, build a home and several other conditions. It is really kind of difficult to think of something that is really free.
Last, but certainly not least, is transferability. If ownership of something cannot be transferred to someone else, then it technically has no value. All one has to do is look at a real estate parcel that is tied up with numerous family members making claims to its ownership to understand how ease of transferability affects value.
Oh, before these words leave your eyes, you should know that the Ellsworth County Web site can be found at http://home.classicnet.net/welcomehome/. Tell Anita that Phil in Mississippi sent you.
Phil Hardwick’s column on Mississippi Business appears regularly in the Mississippi Business Journal. His e-mail address is email@example.com.
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