What We Can Learn From Domino’s AHA Fest and McDonald’s – Strategy with RS

Dominos AHA Value festival offers pizza starting at Rs. 29. Have you gone ahead and ordered it yet? The ‘Aha’ strategy is based on 3 insight:

1. Pain Point: We humans are strange. Whenever we have to ‘open’ our purses to pay, we experience pain. And bigger the price tag bigger is the pain. And when the pain is large – read the price tag is big – we postpone the buying decision.
2.We never blame ourselves for mistakes we make!
3. Charm Pricing: Any price that ends with ‘9’ seems to indicate to us as customers that there is a ‘deal’ in it.
Keeping these 3 insights in mind, Dominos launched AHA Value festival.


*De bundled the product to reduce the price, which results in reduction of pain point for customers : Dominos have taken the product & de-bundled it till the basic pizza remains. Result: the cost has come down & therefore Dominos is able to bring down the price, in this case to Rs 29 without in any way abusing its margin or reducing the quality.


*Charm pricing: You would notice that the price starts at Rs 29, progress to Group pricing of Rs. 49 and so on. The presence of ‘9’ in the price would subliminally indicate to customers that they have a ‘deal’ going for them.
The customers notice the price of Rs. 29 which is extremely attractive, (read: less pain) and end up dialling Dominos. Once that happens the rest of the script is enacted by well trained Dominos employees. She will accept your order for Rs 29 and then innocently and sweetly ask you, “Madam would you want additional toppings – Jalapeno’s, American corn, mushrooms, pineapple, extra cheese…’. The list is endless.”


The mention of these topping has got your mouth watering and you just keep on saying yes, yes, & more yes to her recommendations. By the time you put a stop to your ‘Yes’, the bill has already shot up to Rs 190. Do you feel cheated? Of course not, because it is you, on your own violation, decided to add on the toppings because of which the price shot up! But have you ever blamed yourself for your indiscretion? Of course not. Not now, Not ever!
Result: Dominos has got its average billings and has kept the customer happy because she is unlikely to blame herself for raking up such a huge bill.


Do other brands followed this strategy? McDonalds does. And it has not made just millions but billions out of getting its sales staff to innocuously pose a question to you after you have completed placing your order, “Would you want french fries to go with your order?” You had, of course, come to McDonalds with steely determination not to indulge in french fries no matter how tempting the offer. But when the question was posed to you it melted your steely determination and in a moment of indiscretion you said ‘yes’.


Strategy of Domino: De-bundled the product to reduce the cost .. the price .. the pain point, without compromising on its margin nor its quality. And let the customers increase the price themselves.

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In this series, Rajesh Srivastava, Business Strategist and Visiting Faculty at IIM Indore gives you a regular dose of strategy case studies to help you think and keep you one step ahead as a professional as compared to your peers. Rajesh is an alumnus of IIM Bangalore and IIT Kanpur and has over 2 decades of experience in the FMCG industry. All previous Strategy with RS posts can be found here

Comments

4 comments

Rajesh Srivastava

Mohit apology for responding so late. Of course it does impact positively customer retention & repurchase.