Pizza Marketplace - Winter 2007 - (Page 28) Has the time for pizza coupons expired? By Michelle Avery They’re stuck on pizza boxes, hung on residential doors and sent to e-mail inboxes. The coupon, a mainstay marketing technique for decades, entices customers to independent pizzerias and large chains alike. But how effective are they at maintaining a healthy business? Some industry experts say coupons can harm a pizzeria, tarnish its reputation and lead to dangerously low profit margins. Others contend that the coupon is a tool to increase traffic, opening the door to add-ons and repeat business. Operators who offer discounts risk sacrificing the consumer perception of a brand, said Linda Duke, CEO and principal of Duke Marketing. “Once you discount your menu items, consumers don’t think the menu items are worth regular price, and thus will only frequent a restaurant when they have a coupon,” she said. “It creates a vicious cycle, and ultimately harms the brand and devalues the menu items, which were probably priced correctly to begin with.” Profits could suffer as well, said Kamron Karington, a marketing consultant and former pizzeria operator. For example, a pizzeria running on 20-percent profit essentially could do itself in by offering deep discounts. “If you take a $15 pizza and knock $3 off — bam, that’s gone,” he said. “You’re now operating at break-even and can easily start operating at a loss.” The real deal But offering coupons does work well for some. Domino’s Pizza distributes them because print is still an effective way to inform customers of new products and appeal to their desire for deals, said Tim McIntyre, vice president of communications for Domino’s. “To U.S. consumers, ‘coupon’ means ‘deal’ and there are many people out there who are looking for what they consider to be the best offer they can get,” he said. “Sometimes that means price only; sometimes that means product quality, service and price.” But the company doesn’t let the deal close there. 28 WINTER 2007/SPRING 2008 | PIZZ A MARKETPLACE REPORT
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