In a manner of speaking

Editor's note: Jane E. Mount submitted this article while acting as president of Digital Research Inc., Kennebunk, Maine.

The Great Recession has spurred considerable debate among economists – how to best soften the landing for international markets, how to stimulate economic growth, how to forestall debt crises. Despite these debates, one area that continues to fascinate yet confuse us is the understanding of consumer behavior in light of this economy – and the rational and irrational elements that affect it.

Nowadays, consumers appear even more price-sensitive, as evidenced in the U.S. by the rise of extreme couponing, the annual Black Friday pandemonium and the increasing use of private-label grocery products. For broad consumer product segments, companies have lost pricing power and/or are forced to operate on ever-shrinking margins.

Yet consumers’ desire for value remains. Consequently, we as researchers are asked to help our clients understand how consumers rate brands on value metrics. So, we measure and track brand value ratings. But what do these value ratings really mean?

Looking more deeply

This question was asked by a global services industry client of ours. In light of the global recession this client, understandably, was looking more deeply at value ratings across the countries it services – to gain assurance that its service was not priced higher than market acceptance. This client, however, was uncomfortable with the results of these value ratings. When comparing to satisfaction ratings, in some countries its value ratings were lower than the overall satisfaction rating for its service. Did this mean that people liked it but it was too expensive? In some countries, the opposite was true. Could it be seen as inexpensive but not providing a good service? Did value relate to how the service was priced at all?

Also of interest, unlike measures of overall satisfaction as well as other aspects of satisfaction, measures of value across countries did not always correspond to accepted cultural norms for scale usage. For example, in Spain we saw an expected use of the higher end of the rating scale for measures of value but measures of satisfaction were relatively low. This clearly warranted further investigation.

With the assistance and openness of our client, we conducted a two-cell 10-minute online study among women in nine countries: United States, Australia, Belgium, U.K., France, Germany, Spain, Netherlands and Sweden. The objective of the study was twofold:

  1. To understand how women in different countries define value. Is it based more on absolute cost, on the outcomes of the service or on the depth of the services provided?
  2. To understand how scale usage for ratings of value correlate to ratings on other service attributes in various countries.

In each country, a sample of approximately 200 respondents participated in this survey. The respondent base represented the general population of adult females in each of these countries, balanced to the appropriate census on age. Our friends at Research Now were kind enough to partner with us on this exploration and provided the general-population sample. Their local teams across these countries also reviewed the questionnaire and translations for native applicability. Additionally, we compared the Research Now sample to a separate cell of our client’s adult female customers who were also invited to participate in this study. This helped us in two ways: it provided a completely independent data set with which to conduct this test and it gave us additional insight as to how our client’s customers behaved relative to their marketplace. In total, a data set of 2,939 respondents participated, with no country having fewer than 407 participants.

Within the study, these women were asked to rate on a five-point scale (extremely satisfied, very satisfied, satisfied, not very satisfied, not at all satisfied) their level of satisfaction with their specific service vendors such as dry cleaners, movie theaters, hairdresser/beauty salon, cell phone provider and gym/fitness facility.

They were also asked to rate each of these service vendors on overall value, using a five-point Likert scale (very good value, fairly good value, average value, somewhat poor value, very poor value). Value was asked in the study as “Thinking about any costs associated with these services, how would you rate the value of each?” Respondents were also asked to specifically define value for each service vendor they use, using a list which included the following attributes of value: paying the lowest possible price; receiving the highest-quality service; receiving personalized attention when I need it; being happy with the end result of that service; the prestige offered by that service (U.K.: the status that using the service offers me); the reliability of that service; the convenience of the service; having a variety of service offerings to fit my needs; my confidence/trust in the brand; the company’s willingness to address my complaints; my personal enjoyment of the service; reputation of the service; and employee friendliness.

Finally, in order to confirm the scale usage for the measurement of value beyond local service providers, respondents were asked to rate the perceived value received from a number of well-known international brands, ranging from low-price to upscale. The brands tested included: Ikea, Aldi, BMW, L’Oreal, Apple, Nike, Coca-Cola, The Body Shop, MasterCard, Louis Vuitton, Vodaphone/AT&T, McDonald's and Starbucks.

Closely mirrored

Our first key finding was that the general-population sample closely mirrored the client-provided sample in each of these markets on both measures of satisfaction and value, suggesting that our questions were not a client-specific phenomenon.

Our next key finding was that variations were consistently seen across countries in how women rate brands and services with regard to measures of satisfaction and value. When comparing ratings of value to ratings of satisfaction across service providers in a country, we saw that ratings for value frequently and consistently did not fall in line with ratings of satisfaction. This suggests that cultural bias to measurements of satisfaction versus value does take place.

For example, in Table 1, women in the U.S, Sweden or Germany tend to give their service providers higher ratings of satisfaction but they are more harsh when it comes to rating these same providers on value. Conversely, those in the Netherlands and Spain tend to rate their service providers more positively on value yet more harshly on overall satisfaction. These insights are helpful when comparing product or service satisfaction globally – suggesting that some rating differences by country are to be expected.

In Figure 1, we see how the average satisfaction rating for all service providers evaluated differs from the average value rating for these same providers. With the exception of the Netherlands and Spain, we tend to see harsher ratings for value as compared to ratings of satisfaction.

An equally important aspect of this study is the understanding of how women globally define value. In other words, is value really based on price? In light of the recession, one might think so. To answer this question, these women were asked to define what value means to them with regard to these service providers. Respondents were asked to rank how they determine value for each of these service categories, ranking from a provided list of 13 attributes. Figure 2 highlights an average of all service providers, with lower mean ratings reflecting more important attributes with respect to defining value (the closer an attribute is to 1, the more often it is ranked most important in terms of defining value). Here, we see an uncanny similarity across these countries in how value is defined in terms of ranked importance. While lowest price does routinely fall into the top five attributes of importance, it falls behind “being happy with the end result of that service,” “receiving the highest-quality service” and “the reliability of that service.” This demonstrates that even in times of great economic concern, the average customer is still looking for a positive outcome from their service. Only then will they derive value from it. So, internationally, we see similar drivers of value – but resulting in much different outcomes with regard to ratings of value. This suggests that attention to price alone will not generate a service that is deemed valuable by its customers.

For the most part, women in these nine countries are quite similar in what they are looking for from their service provider. They are also similar in what they are not looking for; reputation and prestige are least likely to be claimed as important factors in defining value. However, some unexpected differences do surface. For example, German women rate friendly service more highly than those in other countries, while Dutch women are more likely to seek prestige.

If this is how women feel about their local service providers, how do they feel about iconic global brands? Do these same cultural expectations exist? In extending this research to key international brands, we see that a low price does not necessarily generate a high value rating globally (Figure 3). For example, while Ikea and Aldi both report high overall value ratings (as would be expected given their low-price positioning), so does BMW. Meanwhile, the value of McDonald's is among the lowest in the group. Inexpensive doesn’t always mean value.

In looking at these results by country, we found the same cultural scale usage persists with regard to the evaluation of value even among iconic brands. Across these brands, we tend to see value ratings that are: lower than average in Germany, Sweden, the U.S., Belgium, France; higher than average in the Netherlands, the U.K. and Spain; average in Australia.

There are differences

This study suggests that there are indeed differences from country-to-country both in how women assess value and, to a much lesser extent, in how they define value. Across countries, the women in this study shared the perception that value is primarily defined by the end result of the service, being high in quality and being reliable. While having a low price is also important, it is never the most important factor relating to value!

Scale usage does differ across countries with regard to value and ratings for value will frequently not fall in line with ratings for satisfaction. The use of value rating scales does differ among countries. Therefore, don’t panic if your value ratings in Germany are lower than those in the U.K., despite strong satisfaction scores in both countries. Cultural use of ratings scales may be at play.