Perceived Value and the Internet ?
By Denny Hatch
Philadelphia has two entrepreneur restaurateurs—Stephen Starr and Neil Stein—who have created some wonderful eating and drinking emporia.
Stephen Starr's hottest new establishment is Morimoto, created around the "Iron Chef," a fascinating television show on the Food Network.
Neil Stein, who owes a ton of back taxes to the city, just filed for Chapter 11. I won't eat at a Neil Stein restaurant. The reason: Peggy and I had dinner at his pricey saloon, Avenue B. We ordered white wine by the glass, the price per glass being about what I pay for a bottle of white at my discount booze store in New Jersey. The waiter brought the bottle and poured us each somewhere between a quarter and a third of a glass. We felt ripped off. I later checked with one oenophile, who said, "He can afford to be generous with his wine. The markup on wine is high." Another restaurateur familiar with Stein's operations said the wine glasses were large and we had received a fair portion.
We would have felt better had the waiter said, "I could give you smaller glasses and fill them to the top, but I think you'll like this larger glass so you can enjoy the bouquet." But he did not. Instead, we each got a one-third glass of wine.
The point is that it matters not one iota whether Neil Stein thinks he was giving us adequate product. We did not perceive these as fair portions. We were the customers. We were right and Stein was wrong. Period.
To paraphrase Vince Lombardi: In direct marketing, the doctrine of perceived value is not everything—it's the only thing. That's because the prospect cannot see, touch, smell, hear or taste the actual product.
With the Internet, two kinds of products are offered: things you can buy that are shipped to you, and the Web site itself, which is either paid for by advertisers or by the user. No matter what the model—ad-supported or free—it must have perceived value so the user will keep returning. If a prospect comes across a Web site that has high perceived value, it immediately will be bookmarked. No bookmark, no return visits. Out of site, out of mind.