Richard J. George, Ph.D.

Fast Food Keeps Pushing Value Envelope

May 21, 2010

FROM RETAILWIRE:
Taking the value menu down yet one more rung, Taco Bell has introduced a $2.00 combo meal. The move is seen as a direct strike at popular dollar menus at McDonald's and other hamburger chains, where three items cost $3. Are value deals a positive or negative for fast food chains?      [more...]

There are two issues here: 1. What is the perceived quality of products priced so cheaply? 2. What is the likelihood of being able to convince consumers to pay more when good times return? The challenge is to add value without lowering price. Using the simple definition of value equaling quality divided by price, it appears that the approach is simply to lower prices and suffer the possible consequences already noted.

However, if quality was defined as benefits received divided by burdens endured, the creative marketer could consider a number of non-price burdens that could be addressed, e.g., faster drive through, cleaner stores, etc, or provide additional benefits, e.g., kids eat free on Mondays, school teams with special seating, etc. The challenge for all marketers today is to find creative ways of creating value without lowering prices. Anybody can give product away. It takes brains to sell it.