Monday, October 13, 2008
McDonald's Monopoly Contest
Ok, so here's what I want to know: how come McDonalds doesn't put those Monopoly pieces on their salads? Seriously they never do it. The fries, the drinks, the coffee, the hash browns, and select sandwiches get the pieces, but the healthiest thing that has it are the grilled chicken premium sandwiches, which cost a bit over $3 apiece by themselves ($4 for the grilled chicken club, my favorite).
Now look, I'm no health nut, but one has to wonder why McDonald's would use the contest this way. Why not put those pieces on their side salad, fruit & walnut salad, or any of their $4-$5 entree salads?
Here's a guess - demand elasticity is higher for the other stuff. Even though there is officially "no purchase necessary," most people don't bother to pay attention to that. If you give a little bit of an incentive, people will go for a little bit of extra stuff (let me make that a large fries, and I'll get your expensive sandwich). They're trying to convince customers who would normally get something off the dollar menu to try the fancier, more expensive stuff on the regular menu. There isn't really a way to upgrade a salad; what would you do, besides add more meat? Super size it? Add fries? Salad meals stand alone.
There's also an adverse selection issue - the type of person who would play a fast food lottery would be more likely to be just as reckless in eating less healthy food. Along the same lines, salad eaters tend to be more disciplined in their eating habits, and part of that involves avoiding McDonalds.
The purpose of the contest is to make money, and this method will likely prove more profitable for McDonalds than promoting its salads. McDonalds does not have a social agenda to consider in pushing healthy foods, only the bottom line. And even then, it's doubtful that would even advance a socil agenda, it would only make some corporate executive and idiotic observers feel better that McDonalds is fighting obesity.
Now look, I'm no health nut, but one has to wonder why McDonald's would use the contest this way. Why not put those pieces on their side salad, fruit & walnut salad, or any of their $4-$5 entree salads?
Here's a guess - demand elasticity is higher for the other stuff. Even though there is officially "no purchase necessary," most people don't bother to pay attention to that. If you give a little bit of an incentive, people will go for a little bit of extra stuff (let me make that a large fries, and I'll get your expensive sandwich). They're trying to convince customers who would normally get something off the dollar menu to try the fancier, more expensive stuff on the regular menu. There isn't really a way to upgrade a salad; what would you do, besides add more meat? Super size it? Add fries? Salad meals stand alone.
There's also an adverse selection issue - the type of person who would play a fast food lottery would be more likely to be just as reckless in eating less healthy food. Along the same lines, salad eaters tend to be more disciplined in their eating habits, and part of that involves avoiding McDonalds.
The purpose of the contest is to make money, and this method will likely prove more profitable for McDonalds than promoting its salads. McDonalds does not have a social agenda to consider in pushing healthy foods, only the bottom line. And even then, it's doubtful that would even advance a socil agenda, it would only make some corporate executive and idiotic observers feel better that McDonalds is fighting obesity.
Labels: Department of Big Surprises, Economic Stuff
