What is it that people are willing to pay for and what sacrifices can be made to deliver a satisfying, if not luxurious, experience?

Case Study: Say It Ain’t So! Is This the Real Thing? Introduction: David Ortega is the lead researcher for an upscale restaurant group hoping to add another chain that would compete directly with the upscale Smith and Wollensky restaurants (http://www .smithandwollensky.com). Smith and Wollensky is part of the Patina Restaurant Group. The average dinner check for a customer at Smith and Wollensky is typically $80 to $100.1 Whenever a new venture of this type is planned, one has to wonder whether there are enough customers willing to pay premium prices given the large number of lesser-priced alternatives. In fact, Smith and Wollensky is considering opening a lesser priced “Grill” that would be positioned so that the average customer check would be about half that of the original. What is it that people are willing to pay for and what sacrifices can be made to deliver a satisfying, if not luxurious, experience? How can he create a unique experience at a lower price? These are the questions facing David Ortega. Research Approach: After considering how to study the issue, David decides a qualitative research approach will be useful. He hopes to develop a deep understanding of how the fine dining experience offers value and perhaps some insights into what intangibles create value for consumers in general. After considering the different options, he decides on a phenomenological approach. The primary tool of investigation is conversational interviewing. David plans to enter into casual conversations with businesspeople in the lounge of the downtown Ritz Carlton. He begins the conversation by commenting on the wine he is sipping—something like, “It isn’t bad, but it’s hard to believe they get $19 for a glass of this stuff.” Results: Two weeks later, David has completed “conversations” with five consumers. He found them very willing and free to talk about the things they indulge in. He develops a field log of notes from the consumers’ comments. The notes are recorded verbatim. The following field notes are highlighted: Joe, wm, 55, attorney (12/5/17 – 10:15 pm): “Well, wine doesn’t have to be expensive to be good. Beyond some basic price point . . . maybe $14 a bottle . . . i find a lot of good wines. But, the wine has to fit the situation. it has to add something. a fake rolex will tell time; but a real rolex tells you about you. i don’t mind paying for something that’s unique—even though it might not be my cup of tea. Chateau masur is like that. it’s from Lebanon! it isn’t always elegant or delicious, but it is always real. You always know it comes from some place very unique and is made under the most trying circumstances” Sally, hf, 45, medical sale (12/7/17 – 5:45 pm): “We pay too much for a lot of stuff though. i like things to be genuine. When you ask for crab you get crab—not Krab with a “K.” it’s made of fish you know!” … “i love old neighborhood italian restaurants. They aren’t always expensive. But, they have character. i think that it is very easy to spoil. i might not want a checkered red and white table cloth at home, but the italian restaurant has to have one. i have to smell the garlic from the parking lot. and, that cheap Chianti, the kind with the basket cradle—it had better be from italy—it tastes sooo good there. You know, you could pay more, but a nice dinner there with a couple of friends is worth a lot. You know, the people who make great wine or who have great restaurants kind of luck into it. i don’t think they really ever sent out a survey asking what the restaurant or the wine should be like. i think they said “i am going to make this the way that i want it to be . . .” and it just happens to be right! They are so committed to the product that it works—no matter the price. But commitment like that costs a little more usually—although they aren’t in it for the money.” Hebert, wm, 40, oil executive (12/8/17 – 11:00 pm): “how old is it? The older it is, the more it is worth—yeah! i like this French wine that has “depuis 1574,” maybe its name is hugel (trying to recall). imagine the same family running that company for hundreds of years. i like to think about the family in the vineyards—the old man on a tractor with his sons running around the sides. Their kids are hanging around the barn.” …. “You know, you can buy cheap things and get cheated too. We are free to be cheated at any price point! (laughter) i remember bringing home a bottle of “Louisiana hot sauce.” man, that stuff didn’t have any heat to it at all. When i looked at the bottle, do you know where it was from? . . . man, it was from Tennessee . . . can you believe that, Louisiana hot sauce from Tennessee!! What a scam.” … “When i buy something nice, i want it to be real. Burgundy should be from Burgundy. Bordeaux should be from Bordeaux. Champagne should be from Champagne—not Texas or California! (laughter) Because i know in Champagne, they know how to make Champagne—sparkling wine. They have perfected the methods over hundreds of years. a good glass of Champagne is worth what you pay!” Angela, bf, 60, insurance executive (12/9/17 – 6:45 pm): “Look at this hotel . . . when you just look at the price you think “this is crazy!” But, look at the attention to detail. Cleaning the floor is a production. have you noticed the way they turn down your bed? Taking care of the plants is serious business to these people. i’ve stayed at a place like this in Florida—i loved it. at first, i couldn’t put my finger on it. Then, it hit me. The place smelled like Florida. They have a way of giving everything the smell of sweet grass and citrus. it’s terrific. another one in California smelled of sandalwood and cypress. You have to be willing to pay more for people that care so much about what they do. maybe that’s your wine? Those smells make me think of those special places. When i drink a wine, i think about where it comes from too.” Burt, wm, 35, sales (12/9/17 – 9:30 pm): “it’s okay for something to be cheap . . . even fake! as long as i know it’s fake. i’ve got three fake rolexes. This one looks pretty good . . . looks genuine . . . but look at the way the second-hand moves . . . it’s jumping. a real one wouldn’t do that!! i ate with this guy the other night who sent back a bottle of wine after ordering it. When the waiter pulled the cork, it didn’t have Domaine mas Blanc written on it—that’s the name of the wine. he said, “how do i know it is real?” at first i thought he was crazy but after i looked at my fake rolex . . . you know, i think he was right. When you spend $100 for a bottle, you want real stuff. But, if you spend $10 for a bottle of wine in a restaurant, who the hell cares? You didn’t pay for it to be real . . . one day, when i pony up ten grand for a real rolex, i’ll send back the fakes!” Results: David decides to use a word count to try to identify the main themes. Hopefully, these themes can help clarify the business problem. Perhaps if the information can’t answer the questions above, it will point him in the right direction. Whatever the case, David feels the project has helped him better understand the total value proposition offered by restaurants, wines, hotels, and other products. Questions: 1. Comment on the research approach. Do you feel it was an appropriate choice? 2. David did not inform these respondents that he was doing marketing research during these conversations. Why do you think he withheld this information and was it appropriate to do so? 3. Using the Internet, try to identify at least three restaurants that Smith and Wollensky competes with and three with whom the new S&W Grill may compete. 4. Try to interpret the discussions above. You may use one of the approaches discussed in the text. What themes should be coded? What themes occur most frequently? Can the different themes be linked together to form a unit of meaning? 5. What is the result of this research? What should David report back to the restaurant group?[order_button_c]