Article

When value is undercooked

There are no longer original products and services, so marketing is the differentiator.

June 13, 2013

By Cliff Courtney, Zimmerman Advertising

It's prime-time TV, and back-to-back TV spots appear for Burger King and McDonalds. They both highlight frozen fruit beverages for $1. One is a Lemonade; one is a Smoothie, but for all intents and purposes the ads and offers are identical: They both show the same "beauty shots" of the product, they're on the screen for about the same amount of time — a blur of pink ice in a clear plastic cup.

It's just another stark reminder that there really aren't different products and services anymore, only the marketing that differentiates them. And given the onslaught of commoditized products, Dollar Menus, casual dining establishments pushing 2 for $22, and misguided promotions that throw the brand out with the bathwater, the landscape continues to be littered with brands for whom the term "holding share" is considered the best possible win.

To exacerbate the problem, Boomers have walked out on QSRs and migrated up to fast casuals, and time-starved moms have given up the hour-long sit down at casual dining restaurants.

Yet look at a brand like Firehouse Subs: While head-to-head with the full gamut of lunch options, consider the category's big dog, Subway. Hard to argue with the $5 footlong as the mother of all sandwich promotions, but Firehouse Subs does not, and never has discounted its menu. Firehouse Subs enjoys a pretty healthy premium on every check, and has seen not just some of the fastest unit growth in the sector, they've been awarded just about every accolade in the industry.

And then there's Papa John's: Pizza? At a premium? Really? We're talking pizza, where there's basically no such thing as a bad product. I mean people eat cold pizza and leftover pizza for breakfast. They even ate the (self-proclaimed) cardboard, wax paper and ketchup that Domino's served for decades. In truth pizza is like sex. When it's good, it's very good. But when it's bad, it's still pretty good. So where does a brand think that it can come into a category as Papa John's did, a category with two Goliaths who are collectively four times the size, plus tens of thousands of mom and pop pizzerias, and win on a (higher priced) quality proposition?

Well, however you define winning —  market share, average ticket, loyalty, comp sales, and of course, stock price — Papa John's has truly proved that when it comes to value proposition, it's not about what is, only what could be.

So what exactly are the 3 forget-everything-else-you-ever-heard-about-value rules for creating a value proposition?

I thought you'd never ask...

1. Once and for all, value doesn't mean price

Value is what you get divided by what you pay. A numerator and a denominator. (Shout out to former McDonald's CMO Larry Light on this). The price is part of the denominator, i.e. the cost of the product or service, time, effort, etc. But it is only half the equation, so before you start talking about value, remember that what you're offering your customer and what they'll pay for it may be two sides of the same coin, but they're still different sides. Don't go thinking that you can discount your way into building your brand because even Walmart had to stop focusing on their denominator (Always Low Prices) and balance their value proposition: Save Money, Live Better.

2. Intangible assets are still assets

Nobody disputes the imprint Steve Jobs left on Apple, yet his name never appeared on a balance sheet. Did that make him any less THE key differentiator in Apple's value proposition? White Castle has legacy, a cult-like following of loyalists called "Cravers," even a "Craver Hall Of Fame" and the increasing trial of new customers based on their "Craver Nation" digital campaign. But none of that appears in a spreadsheet. Numbers may not lie, but neither does the value of intangible assets.

3. Quality is the one attribute to rule them all

Quality —a s in a high-quality experience that takes convenience off the table (nobody cares how long they have to wait on line at Shake Shack or In 'N Out). Quality — as in the consistency of the product (Bonefish isn't giving anything away, but talk about right on the money... all good, all the time). Quality — as in constant improvement. Take Starbucks, McDonald's and Boston Market, for instance, who upgraded their operations, then learned how to market the merchandise and started winning big.

Sure, if you ask people what their priorities are when choosing a restaurant, price always floats to the top. They'll even use the word value as a proxy for price. But an affordable  is merely a table stake. People want their money's worth. They'll wait in line and pay extra for coffee even when it's free at the office and cost pennies a cup at home because it's worth it. They'll drive by three burger places to get to the one with the differentiating taste because it's worth it. And Americans will literally go out to eat more than a billion times in the next year when it's always cheaper to eat at home. The experience, the break and the very value of the restaurant makes it all worth it.

So next time you want to lead with price, don't. There's always a lower one right around the corner. Instead, lead with your differentiator. Lead with what you're delivering. Lead with the goods and make them great. Tangible or intangible, but always differentiated, because value will always be the most important item on your brand's menu.

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