Value Meals And The Decline of Brand Experience

Value. 

KFC, Wendy’s, Jack in the Box, Arby’s, McDonald’s, Burger King are all offering value meals. Even Starbucks is offering ‘Pairing Menus,” a euphemism for value meal along with steep promotions on coffee drinks.

Here is the problem. Value is more than price per offering. Value is not on the menu board. Price is on the menu board. Many brands today are defaulting to the bad habit of equating value and price. Over the years, marketing has corrupted the meaning of value equating value with price. Price is important. However, a brand’s worth depends on a lot more than price.

By focusing only on price per offering, these brands seem to be saying that the total brand experience and other total brand costs (time and effort) are irrelevant. Only price per pieces matters. 

And, this behavior is odd because increasingly our economy is experience-driven. Yet, these establishments, including Starbucks, are forgoing the total brand experience in order to gain immediate sales, albeit, from possibly deal loyal customers. Starbucks is saying that the café experience is no longer an issue. Visit us for the great price. This rankles Starbucks founder and ex-three-time-CEO, Howard Schultz. Mr. Schultz believe improving the Starbucks experience is the road to redemption.

The days of value being price per offer are gone. It is no longer “the price is right.” The better communication is “the great, branded experience is right for the price.” What you get for what you pay is now defined as the total brand experience relative to the total brand costs (price, time effort). Brands must deliver the total brand experience at an exciting cost to generate value. 

Defining value as merely low price is one of the riskiest practices of modern marketing. Brands have been their own worst enemies by letting “low price” become a substitute for the idea of “value.” 

Price and value are not the same thing. Yet, many brands continue to use these terms interchangeably.  Price is what marketers charge. Value is what customers perceive an offer to be worth. Price is the amount of money required to pay for something. Value is about worth. In fact, the actual word, value, comes from the Latin valere, which means, “to be worth.” Price means, “How much money does it cost?” Value means, “How much is it worth?” That is why we have two different words.

Worse yet, it is a marketing sin when owners of brand portfolios refer to a particular brand in their portfolio as a “value brand.” Each brand in the portfolio is a value brand. Each meal in the portfolio is a value meal. We value each offering for different reasons. The customers of a Toyota Corolla and the customers of a Lexus ES are both looking for a good value. Value can happen at any price point: “That’s a great value” can apply to a Porsche and a Prius; great value can apply to a shoe from Designer Shoe Warehouse and from Saks Fifth Avenue. Great value applies to Aldi supermarkets and to Whole Foods. Value is in the eye of the customer. It is learned from interaction. 

This means that it is a major marketing misdeed to identify a market segment as the “value conscious” customer. Every customer is value conscious. It is wrong to say that customers have become more value conscious. Customers have always been, and will always be, value conscious. And, yet, this is what brands are doing: brands are saying that lower income customers are value conscious while higher income customers are not value conscious. And, brand are saying that certain offerings are better value than others. Please keep in mind that the “good-better-best” approach to selling is a classic of brand mismanagement. Every offering must be a great value.

Value is relative. Brands must calculate value for each brand in the customer-defined competitive set. A specific brand’s value is indexed to the average of the competitive set.

Additionally, a brand’s perceived value must be seen as a fair value for the promised experience. Again, brands do not determine fair value. Customers do. Brand marketers set price. Consumers decide fair value. Fairness is more than mere price. Fairness contains justice. Justice means that the benefits-per-costs equation is equitable, just, dependable, trustworthy and fair.

The fast food industry has always used the terminology of Value Meal. This nomenclature has educated customers to the relative “cheapness” of the deal. However, Starbucks has always been uninvolved in this Value Meal marketing. Starbucks was created with a premium caché as the convivial place for coffee connoisseurs. 

But now, Starbucks has entered with its Pairings Menu. Starbucks is also touting deals, especially on its app. Starbucks’ CFO indicated that there is a “value perception” with Starbucks. Starbucks also is offering BOGOs and 50% libations.  Is a value meal the way to go? Are discounts part of Starbucks’ DNA? What about the Starbucks experience? Howard Schultz indicates that current management has been skimping on improving the experience as current management kowtows at the altar of data.

The looming danger is the loss of true loyalists and the temporary accrual of deal loyalists. And, the diminishment of the Starbucks experience; an experience that has relevantly differentiated the Starbucks brand. Restaurant Business thinks that the value menu for Starbucks is a good thing. 

Starbucks value perception must rely on more than a good deal. Starbucks is a great brand. Communications must focus on the great brand experience that is the best value.

The recent iteration of Forrester Research’s customer experience survey indicates that customer experience ratings have declined for a third year in a row, according to Wall Street Journal reporting. The Forrester study polls 98,363 consumers across 223 brands. The Wall Street Journal writes that the scores are the lowest since 2016.

Although Forrester points out that the pandemic did create customer “frustrations,” right now, “… consumers are skeptical of the value they believe they are getting from companies.”  A Forrester principal analyst indicated, “Somebody is paying more but then they’re not seeing the benefit of paying more. They’re not getting a better experience that they think should accompany that higher price.”

A brand is a promise of an expected relevant, differentiated experience. Once you determine that the experience is incidental to the price, you damage the brand. Once you determine that price is the prize rather than the total brand experience, you place your brand into the commodity corner. The data appears to show that experiences are not always the focus of marketing efforts. 

Howard Schultz recently complained – publicly – that the in-store Starbucks experience was declining and management needed to focus more on the store. Operational issues are marring the Starbucks experience. Now, Starbucks is falling into line with the fast food brands when it comes to price deals.

So, what happens next? Will Starbucks continue to offer promotions? When the prices return to higher levels what will happen? And, what about the Starbucks experience? Starbucks’ total brand experience – which drives value – has always been at the core of the brand. Starbucks has always been about more than the coffee. 

And, what about Burger King, KFC, Wendy’s, Jack in the Box, Arby’s, McDonald’s: what happens when the promos go? What will define value at these brands? Until brands start understanding value as something much bigger than price, brands will continue to harm their essential experience.