At What Point Does Declining Value Become A Concern?

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?

14 thoughts on “At What Point Does Declining Value Become A Concern?”

  1. I believe many people just don’t take the time to be as analytical as you’ve been. Either they just don’t want to be bothered with thinking things through in that manner or they just don’t think that way in the first place. And, that’s too bad, because it means marketers can take advantage. I evaluate situations like the ones you’ve outlined in a very similar manner. It’s just the way I’m programmed.

    • That’s certainly true — that folks don’t think hard enough about small changes to register outrage.

      The especially interesting thing here, though, is that even when a 44% increase is pointed out to them they don’t seem to pay much attention. Now that, I think, is amazing.

  2. The size of the box of cereal keeps getting smaller to “offset the higher price of food” but it turns out that food is actually a very minor cost for the box. It costs more to sell the stuff than it does to make it!

  3. A pet peeve of mine is the shrinking of food container sizes. I actually wrote about this back in 2008. Some of that is why I shop at stores like Costco, Food Maxx, and Grocery Outlet. There definitely is a point where I say “Forget them” and buy alternative products.

  4. The difficult economy has changed a lot of these programs and even more companies have stopped them. I think my value system has changed too! I will no longer do everything to just save a buck or earn miles. Part of my reason is I have achieved my goals and I have to let some things slip..

    • I understand companies have to change them, especially if they have so many people using them that it becomes untenable. Change is inevitable. I just hate how they try to hide the changes and actually let people believe they are getting something better.

  5. Southwest Rapid Rewards are going from 60 points to a dollar to 70 points to a dollar. A few people have said something and I replied to the Southwest email announcing it but haven’t gotten a response. I doubt they’ll change their mind, despite the fact that they do get more points when their fares cost more… oh well! They still have the best program, sadly, so I’ll stick with it.

  6. I find it difficult to stomach how restaurants charge 2+ dollars for a drink. I don’t see the value in spending that much on a drink. When you have a family of six like we do, that adds a good deal to the final bill.

    • We typically get water at restaurants for that reason. The only thing that you have to be careful of in that case is to tip on what the amount would have been had you gotten a drink, since the waitperson still has to take the time and effort to get and refill your water. So with your family of six, if you all got water, I’d probably calculate your tip then add $2 – $2.50

  7. I have been disappointed in the past when I brought up something that really needed correcting and no one seemed to care even when it affected them. This type of apathy is hard for me to understand, too.

  8. I think that many people don’t bother THINK, this is why you got no response. Many are, excuse me to be so blunt, just monkeys who’s get excited over the ‘change’ or ‘improvement’ as these businesses call it, and don’t bother use their god given brain to actually do some math 😀

  9. I think for most of us we don’t really sit down and “do the math”. We just accept things as they are and assume that if they changed the service or the fees, then they must have had a very good reason for doing so and as long as it doesn’t “significantly” affect our pockets, then we are willing to roll with it. Probably why you didn’t get any likes or activity when you pointed out the reduction in value.
    I do agree with you though, more people need to consider the numbers vs the relative value delivered…once in a while, the “new and improved” may not be worth the paper its written on!

  10. I’d agree with the others saying most people don’t take the time to think about it. We are often so caught up in other things that we don’t notice that the things we buy are seemingly always returning less and less value, even though it would greatly benefit us if we did notice. It all goes back to the supply/demand curves and what people perceive as a good value for the convenience they get.

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