The definitions of value�� - column

The definitions of value . . .

The original definition of value, as I know it, is the balance created by quality and price. Remember the old variable equation: Price + quantity = value?

My favorite definition, however, is told by Mark Lawless, an excellent marketing strategist and the guy who helped me start Contract Marketing.

Mark often said, "Value is simply the perception that you are getting more than you paid for."

We can't get any clearer than that, and yet how many of us have forgotten?

Value perceptions are also relative. For each dining occasion a consumer calls up a perceptual window. For example, Mark would say, "If you are looking for a great steak no matter what the cost is, do you think of Ponderosa or Ryan's of Bonanza? Of course not." And yet their origin is steak, and their title is still steak house.

But if you're looking to feed a family well on a budget, these options immediately come into your "perceptual window" as a value.

Our industry's greatest challenge may not be competitive saturation or labor pool shortage or the environmental crisis. It could be instead that many of us are being judged by consumers to be an insufficient value to return to.

Value is most frequently damaged by our corporate greed. When your chain is thinking, "We're getting more than we paid for" on a given product's price, it is likely the customer will ultimately have a different feeling.

Think of the pricing meetings you've been in over the years. I've been to many such meetings, and most center on: * The need to grow sales ($ volume, not customer counts). * Food cost percentages and how each product lines up with other products in our mix. * A need to recover profit that's been lost for some other reason.

And so who talked about value in the last pricing meeting you were in?

Negative value perceptions never develop fast. And yet the realization always seems to come with a jolt.

How many times have you said or heard: "So, I gave the cashier [at the fast food place] a twenty, and I didn't get any change!"

Or, "Yes, I want this to be a special dinner, but can't we do it for less than $50 per person?"

Or, "I asked for the same thing I've been ordering there for years and I realized - it's doubled in price."

Barry Krantz, president of Restaurant Enterprise Family Restaurants Group, says: "Your price is your promise . . . so, how can you ever raise a price on the same product without raising the value perception?"

Great value, just like poor value, is a determination made solely by the consumer based solely on his or her perception. A higher-priced meal can constitute a value as much as a lower priced meal . . . depending again on (1) the occasion and (2) your perceptual window.

Think there are no great values available in your segment anymore? Here's one from each category (along with my scientific projection of an average consumer's comment one each):

Fast food: Taco Bell - Average customer comment: "I didn't believe it at first - a taco for 49 cents. All the time? Wow." (Now 59 cents.)

Family: Denny's - Average customer comment: "How can they still put all this food in the Grand Slam [breakfast] for only $2.99? Wow."

Full service: Olive Garden - Average consumer comment: "You mean our total check [for two]) was only $18 when we had all the salad and bread sticks we wanted? Wow."

Notice that in each of those selected examples the "wow" isn't only for the consumer. In each case we are also witnessing excellent volume and profit performance by the chains named.

Both "wows" - corporate and consumer - happen because the chains focus on their corporate goals by focusing on the value they might deliver to their consumer, not just in a deal but consistently every day.

Because, in the end, the definition of value is not solely your quality nor solely your price. And it is never what you define as your corporate needs in the board room pricing meetings.

Value is simply the perception by your customer that they're getting more than they paid for.

COPYRIGHT 1991 Reproduced with permission of the copyright holder. Further reproduction or distribution is prohibited without permission.
COPYRIGHT 2004 Gale Group