Mary Wilson remembers well the visit she got from the new pizza competitor in town. The brash and brazen entrepreneur walked into her Southern Illinois Domino's Pizza store and arrogantly announced that he was going to put her out of business.
The competitor was a former pizza chain supervisor with a strong operations background. He soon opened his store with a low price strategy and within two months had cut Mary's sales in half. What had been a consistent $6,000 a week store, was now down to $3,000 and trending even lower. Smelling blood, the competitor decided to put the final nails into Mary's coffin by promoting his pizza store as the one that would double the value of any pizza coupon in town. Unfortunately, he didn't know that Mary was about to employ a database marketing strategy that would be renamed in his memory as the Competitor Extermination Program.
Since Mary's customers were being tracked by computer, she decided to surgically mail a $5 off coupon exclusively to her non-customers. In this way she wouldn't discount and disrupt the income stream provided by her regular customers. Additionally, she mailed those incredibly close to her competitor's location. The idea was to turn the competitor's bread and butter customers into gravy for her and to force him to give away hundreds of free pizzas. It worked. Within 10 days the competitor canceled his offer while creating much ill will. This began a reversal in fortunes and within two months he sold out. Mary's sales returned to their previous levels.
The strategy does not always work that neatly. The competitor helped immensely by making an offer that made him vulnerable to an already effective strategy. The Competition Extermination Program is a great way of illustrating how a little strategy can go a long way in the execution of marketing warfare.
As you see from the story above, you should consider very carefully if you want to match the prices you see being offered by your competition. You should find out if the offers you are seeing are being offered to the general public, or if they're being made only to a special group of their non-customers.
The operational inconvenience of having to collect customer address information, as it turns out, offers the pizza delivery operator an incredible competitive advantage. Whether you collect customer delivery information on paper, or directly into a computer, this precious information makes it possible for you to advertise in a way most of your fast food competitors can't match. Database marketing is your secret marketing weapon. You know the exact location of each of your customers and your competition doesn't. Even though your competition may outspend you in the market, you will always be able to outspend him when it comes to reaching those that count the most to you, your customers.
Database marketing applications, like the Competitor Extermination Program, are becoming more and more common in the pizza industry as more and more pizza operators realize that they have customer information already on their computer. Pizza Hut, Domino's, Little Caesars and many other chains have active database marketing programs in place. PMQ will keep you informed about ways this technology can be used to sell more pizza.
COMPETITOR EXTERMINATION PROGRAM
Do you have a competitor you would like to do something about? Here's a strategy which may interest you.
- Identify your target competitor. You may already know who this is, or a mail survey can determine the information for you.
- Determine the battlefield. Just as most of your sales come from the area closest to your store, so do your competitor's. Mark his primary area of influence on your battle map. The battle will take place in his backyard.
- Find out your competitor's marketing strategy and beat it! Is it price? Is it a particular promotion? Whatever it is that he is doing, you'll want to give the customers an offer they can't refuse.
- Mail and/or doorhang a very powerful offer only to your noncustomers in his area of influence. This will not interfere with your regular customer income flow, but will instead concentrate on customers that you don't have anyway. With nothing to lose, you can turn your competitor's bread-and-butter customers into gravy for you.