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What would Dave do? Wendy’s management stirred quite the kerfuffle recently. This controversy reveals how important telling your story to the right audience – in the right way – makes all the difference.

In an earnings call on Feb. 15th, Wendy’s CEO Kirk Tanner said the chain will test “more enhanced features like dynamic pricing and day-part offerings along with AI-enabled menu changes and suggestive selling.” New digital menu boards will enable the company to change prices depending on demand. Unfortunately, many customers saw “dynamic pricing” as “surge pricing” and didn’t like that at all.

Customers have raged at “surge pricing” or “dynamic pricing” -even though discounting during downtimes has been around since happy hour. They are virtually the same thing. Dynamic pricing is just discounting in reverse. “A rose by another name,” indeed.

Wendy’s new price management tech-speak might have sounded cool to the board and some investors but customers can think differently. Focusing on discounts during low demand rather than relying on surge pricing in high demand might have worked better.

Here are several reasons why emphasizing discounts during low demand might be a better approach for Wendy’s pricing story and why the way you frame pricing is as important to your customers as it is to you:

  1. Stimulating Demand:
    Psychological Impact: Discounts during low demand can have a powerful psychological impact on consumers. Lower prices create a perception of value and affordability, encouraging individuals to make purchases they might otherwise postpone.
  2. Inventory Management:
    Clearing Excess Inventory: During periods of low demand, businesses may find themselves with excess inventory. Offering discounts provides an effective way to clear out stock, preventing overstock situations and potential losses.
  3. Customer Loyalty:
    Building Relationships: Providing discounts during off-peak times can help build customer loyalty. Customers appreciate feeling valued, and discounts serve as a way to reward them for their patronage, potentially fostering long-term relationships.
  4. Competitive Advantage:
    Market Differentiation: Offering discounts when competitors might not can be a powerful differentiator. It sets the business apart and attracts cost-conscious consumers looking for the best deals.
  5. Minimizing Consumer Backlash:
    Avoiding Negative Perception: Surge pricing during high demand can sometimes lead to negative consumer perceptions, as customers may view it as opportunistic or unfair. Focusing on discounts during low demand avoids these potential backlash scenarios.
  6. Customer Acquisition:
    Attracting New Customers: Lower prices during low demand can attract new customers who might be hesitant to try a product or service at its regular price. It serves as a cost-effective way to expand the customer base.
  7. Revenue Smoothing:
    Maintaining Cash Flow: While surge pricing aims to maximize revenue during peak times, discounts during low demand maintain cash flow throughout the year. This approach can provide a more stable and predictable revenue stream.
  8. Building Positive Perception:
    Enhancing Brand Image: Offering discounts in lean periods demonstrates flexibility and a customer-centric approach. It can contribute to a positive brand image by showcasing a commitment to providing value regardless of market conditions.
  9. Market Penetration:
    Encouraging Trial: Discounts can entice consumers who may have been on the fence to try a product or service. This can be especially effective for businesses seeking to penetrate new markets or introduce new offerings.

Food and beverage pricing is tricky stuff and so is public messaging. Firms want to maintain the perception of quality while staying economically competitive. How you frame pricing to your consumers significantly impacts your brand. Are you reassuringly expensive or a terrific deal? Either can be a powerful value proposition. The path you choose should be consistent with your values as a brand and your messaging management. As a marketing agency in Annapolis, Maryland, we help companies tell their story well. We’d love to help you tell yours. Contact us.

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