How Basic Burgernomics Can Work for Radio

In my last blog, I wrote about the power of three as a tool for getting better prices for products and services. Simply put, if you want to sell more, provide three choices. This timeless strategy is being used again by the big burger chains of the world with superior results.


The Saturday edition of The Globe and Mail newspaper this week ran an article in their business section reporting how McDonald’s stock was up more than 30 percent over the past year - in spite of the recession that continues to grip the United States. In the article it held how fast-food chains used to believe that no one single item should cost more than $5. But McDonalds recently broke that barrier in offering a $5.98 burger (Canadian) in their Ontario outlets.


What has this to do with the power of three? Scott Hume, editor of Burgerbusiness.com stated that burger “chains are using a barbell strategy, mixing low priced items with premium price items” to boost prices. That’s the beauty of the power of three.


The power of three dictates that when offering 3 choices, the most expensive choice should go beyond historical pricing for an item. That’s what McDonalds did with their Smokehouse Deluxe Burger. They priced it at 20% more than common practice. And they ended up getting it.


In my theatre example, 20% of the patrons at the theatre ended up purchasing the newly created super size drink. And their surprising bonus was that 60% of purchasers chose the medium size drink (which was actually their old large size). In the past, the same size drink accounted for only 20% of their sales.


It seems the timeless strategy of the power of three, with its super sized third choice, is being understood more and more. . As Mr. Hume went on to say about burger chains, “Increasingly, they’re tilting the balance toward the premium end”. Why?


Because people love excess in burgers, soft drinks, computers, cars and just about everything else. Radio should consider this strategy as well. For a more complete look at the power of three, take a look at my Last blog, “How to get Better Results for Clients ”.