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Getting What You Pay For April 14, 2009

Posted by Jason in Daily PM.
Tags: , , ,

The other day, I stopped in for a hamburger.  As I sat eating, I overheard another customer complaining about getting the wrong order.  From what I could tell, it was something fairly minor (like, the burger was right, but there was something that was/was not supposed to be on it).  Regardless, it got me thinking about the concept of a commodity versus a more “experience” based product or service.

We can all generally identify a commodity: a product or service that is very similar or identical to its competition.  Price is the significant differentiator.  Most goods and services are marketed to challenge their real or perceived status as commodities.  But as I sat eating my admittedly commoditized hamburger, I tried to look at my small purchase in a different way.

What if I had gone to a four-star restaurant and paid whatever it is you pay to eat at a four-star restaurant, just to be served whatever the chef had decided to prepare that day?  What makes someone pay more for less choice?  On top of that, what makes someone throw a fit over a five dollar burger that didn’t have the right sauce on it?  If choice really is the key to consumer satisfaction, something is seriously wrong with the economics of the food industry.

But of course, we know better, don’t we.  One buyer is choosing a commodity based likely on two main motivators: price and a modest ability to choose what you want.  If either of those things isn’t as advertised, well, just hope you aren’t behind that person in line.

The other is purchasing a professional service, with the physical meal as a mere component of the overall experience.  Compare to someone like an accountant or engineer who ultimately does provide a product (an audit or a set of plans for instance) but whose approach to the project and attitude toward the client make all the difference.

If I had perceived my modest hamburger purchase to be more experience-based, I would focus on the fact that I am able to have a margianally nutritious, 15-minute lunch for a few dollars, and whether the meal happened to be chicken, fish, or beef would be virtually irrelevant.  But by focusing on the detailed content of the product, I might lose sight of this bigger picture and demand, as my fellow customer did, that I deserve to “have it my way.”



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