What Do Consumers Value?
Beef shoppers value quality, service above price.
Price is important in nearly every buying decision. However, when it comes to groceries, a new study shows consumers place more value on quality and service than price alone. The doctoral research by Ken Wicker through Capella University’s School of Business is titled, “A study of customer value and loyalty in the supermarket industry.”
Wicker, currently vice president for a southeastern U.S. supermarket chain, surveyed shoppers in Atlanta, Ga., with a demographic scaled to provide results applicable nationwide. Using decision factors of price, quality, service, convenience, store atmosphere and store brands, the research revealed new insights on customer loyalty and perception of value.
| Table 1: Customer value and loyalty in the supermarket industry | ||
| I will pay more for higher-quality foods |
Response | |
| Answer options | percent | No. |
| Strongly disagree | 1.1% | $33.75 |
| Disagree | 9.0% | $36.45 |
| Neither disagree or agree | 26.8% | $39.60 |
| Agree | 50.3% | $42.30 |
| Strongly agree | 12.7% | $45.00 |
Note: 354 answered question; 0 skipped question. |
||
A paradigm shift from traditional viewpoints was evident.
“Quality [overall] and high-quality perishables far outranked price,” Wicker reports. “That was the number one predictor of value and loyalty for supermarket customers.”
The findings on quality and loyalty go to the heart of strategic planning, especially in the food business.
“Loyal customers shop with you more often and spend more when they’re with you, whether it’s in the restaurant industry or the supermarket industry,” Wicker explains.
The link between quality and loyalty was easy to see. For example, if poor quality became apparent at their primary store, more than 72% of survey participants “agreed” or “strongly agreed” they would stop shopping there. A similar share of those surveyed said they will pay more for higher-quality foods (Fig. 1), and 67% would not sacrifice quality for low price.
Prior research suggested that customers on a limited food budget were searching for perishable items fitting a category of “lesser quality for lower price.” Wicker says his work shows that belief is misguided. The size of a customer’s budget does not appear to lessen the importance of quality.
“Actually, customers with less expendable income view poor quality as a risk they cannot afford because it might waste their money,” he explains. Wicker’s research concludes customers would rather spend their limited budget on higher-quality items they can trust, even if they cost more.
Although there was no sole focus on the meatcase, beef products were an integral part of the perishable items evaluated, Wicker says, noting a message for the greater beef industry.
“The quality — that’s where it starts,” he says. “Many meals are built around meat as the main component. If the customer builds a whole meal around a specific cut of meat, or patronizes their favorite restaurant and the quality is not good, you stand a high chance of losing a loyal customer.”
Wicker knows enough about the production side to see that stakeholders in every segment of the beef industry play a role in supplying consumers with products that satisfy their desire for high quality and help create loyalty. That loyalty goes to both the premium beef and the store that features it.
“Customers today expect quality more than they ever have before,” he says. “Fixed costs [of cattle production] are pretty similar, whether you’re raising a high-quality product or a minimal-standard product, but if you choose to deliver a high-quality product at a fair value, that’s going to resonate with the customer and build loyalty.”
Editor’s Note: Lyndee Stabel is a freelance writer for Certified Angus Beef LLC.