Wednesday, February 4, 2009

Domino's New Pricing Strategy

The economy is tough for everyone. Consumers are pinching pennies and seeking max value for their dollar not just in high end products, but in everything they purchase, as grocers and fast food chains are learning.

Domino's Pizza, for example, is looking to attract more value focused consumers and to recover many of the consumers it has lost due to recent price increases. Domino's told Forbes Magazine that it has lost the greatest number of consumers in the "single pizza customers" class, described as those who place an order for just one pie and are looking for a cheaper dinner alternative.

The article reports:
"Brandon said to bring those customers back to Domino's, the chain is now implementing a "barbell" pricing strategy. In that model, some products are priced lower to appeal to customers searching for a good deal while other more premium products cost more for those customers who are less price-sensitive.

"The company did not offer any specifics on whether it has lowered its prices on some of its menu items, but Brandon did say the chain's new hot sandwiches, which are priced at $4.99, are an example of the chain's new strategy.

"The burger guys have their 99 cent offering," he said. "We feel like we have to be in that space and in that game" by offering some lower-priced alternatives like the hot sandwiches."

Read the full article "Domino's Pizza implements new pricing strategy"

On the other side of the coin, this story focuses on how businesses are squeezing vendors on prices, especially in the realm of IT, software and technology upgrades. A recently released survey of CIO's reported the following:
"Chief information officers expect their 2009 technology budgets to fall roughly 2.3 percent but are spreading the pain: Executives expect better pricing from their key vendors.

"Bottom line: If you have budget–and are willing to spend it–deals abound, according to Citi’s quarterly CIO survey."

Read the full CIO Survey here. Isn't it interesting how pricing has come to the forefront in all industries? When the economy gets tough, pricing and business basics are the keys to survival. Warmly, EM

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