At What Point Does Declining Value Become A Concern?

I’ve had a few recent situations where I was presented with declining value in varying circumstances.  In each of the circumstances, which I’ve briefly outlined below, I pointed out the declining value through social media circles, and I was surprised to see the response by other followers.  Or, more exactly, the lack of response.

Halloween Fun At The Zoo

The Detroit Zoo holds an annual event called the Zoo Boo.  It actually stretches across most of October, and on Friday and Saturday nights, families can come and walk through a portion of the zoo where there is a corn maze, seasonal themed displays, an activities center, and some handouts of candy and other treats.  It’s pretty popular and we have gone for the last three years.  So, we were thinking about going again this year, when my wife pointed out two changes:

  • Admission for the event went from $7 to $8
  • They were now charging parking.  Typically, all parking for the Zoo Boo was free for both members and non-members.  Parking for regular zoo visit is free for members who purchase an annual pass.

mb-201310moneyFor a family of four, this meant that the cost (assuming they all drove together in one car) would go from $28 to $37, over a 30% increase.  I felt this was unwarranted.  I was kind of annoyed by the fact that they were charging for parking (especially members, which we have been for many years).  I questioned why the cost needed to go up, especially considering that most of the handouts were provided by the sponsors, so it’s not like they had to pay for the candy and such that they give out.  I even looked closer to see if maybe they were adding new events, displays or access, but the description of the event was the same as in years past.

Nobody from the zoo responded, and not a single of the 173,000+ followers liked my post or expressed similar concerns.

Restaurant Rewards

There’s a local chain of Italian restaurants (Andiamo) that has been a favorite of ours for years.  We had our rehearsal dinner at one location, we threw a surprise 25th anniversary party for my parents there, we’ve dined there multiple times for various events such as birthdays, New Years, and our anniversary.  So, a few years back, it was a no-brainer to join their rewards program.  We paid a one-time enrollment fee and for that, we got a free dinner during the month of my birthday, as well as a program where after every $350 you spent, you got $25 in credits.

They announced that they were changing the program, and promoted it as ‘new and improved’ as you now got rewards after only 250 points.  The reward changed to $10 after you crossed this threshold.  I did the math in my head, and realized that on a reward-per-dollar spent you were getting 44% less bang for your buck.

I wrote on their Facebook wall pointing out that the program was definitely changed, but maybe not necessarily improved.  To their credit, they actually did write a very detailed response acknowledging that they made other changes which would offset the reduction in other ways (a second meal sometime during the year), and also basically acknoweldged that the program needed to be tweaked to allow them to balance the rewards with profitability.  I was actually pretty impressed and gave them a lot of credit.  In my mind, I understood the changes, and didn’t have a complaint about the changes themselves (especially given that the cost of joining the program were a one-time only thing), but it was just that they presented it as ‘improved’.

Still, after I posted on their wall, there were over a dozen people that liked their announcement, but only one that liked my response pointing out the 44% reduction.  that one person…my wife.

The Sliding Scale of Value

These incidents both happened within a couple of days of each other, so the lack of attention by others was amplified since they both happened.  And, I spent a couple of weeks thinking about why the issues I raised really weren’t of concern.

I think one of the reasons would be that there’s a sliding scale of value, and that there are thresholds along the way, and only after you cross those thresholds do you get concerned.

Some examples would be:

  • Gas – We don’t generally get alarmed every time the price goes up, but over the past few years, anytime prices in most areas get anywhere near $4, the chatter instantly heats up.
  • Food packaging – It’s long been a pet peeve when food packaging changes (new look, same great product!) only to find out that the new package contains less of the product than the old one did, but the price stays the same.

In these cases, or similar cases (like my examples), there’s probably some wiggle room before a trigger goes off.  I’m sure in the case of food packaging, there are lots of studies done beforehand to find just how much they can get away with taking away before consumers howl.

Removal of Excess Value

After thinking about the zoo example for so long, I looked at it a different way and thought that maybe people felt that $37 for a family of four was still a value.  Maybe, for many, the previous cost of $28 was considered a great deal.  Meaning, that there’s wiggle room in what they can get away with charging before they put attendance at risk.

Acceptable Loss

Sticking with the zoo, what if the zoo full well knew that the price increases were going to turn people away, but were completely fine with that?  This could make sense if the loss of customers was made up by the price increase.  What if 10% of families decided to skip the event this year.  The other 90% are still going to pay the extra 30%, meaning that they’d still come up with a revenue increase of roughly 17% (90% of last years attendees x 130% of last years pricing).

This could go south if too many people decided to skip the event, but again, I’m thinking there are probably studies and such done in circumstances involving national brands and the like.

Long and short

I spent the first week or so after these two things completely bewildered about why the concern that I was expressing didn’t even warrant a few likes.  But, after thinking about it, I started to see a little sense in it.  Maybe some of the long ago learned items from my marketing classes in grad school started to bubble to the surface.

Readers, have you ever raised a concern about pricing or something else and found apathy, especially in the day of social networking?  What are some of your thresholds or hot buttons that get you going when it comes to pricing and marketing?

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