Which would you prefer: A guaranteed $750,000 now or a possible $1,000,000 that you only get if everything goes according to plan? This was likely the question Burger King marketers had in mind when deciding to offer a subscription for a daily cup of BK Café. BK’s decision is the catalyst for this week’s Lesson Found: Packaging products and services to increase cash flow and boost sales.
BK’s subscription form of packaging has two obvious advantages.
- Guarantees a steady flow of cash (possibly forever if subscribers ignore the small monthly charge).
- More importantly, draws-in customers especially during breakfast – the mealtime showing the greatest sales decline across the fast-food industry.
My addiction to mint M&Ms revealed another “creative packaging” example. Shopping to satisfy my craving, I found new packaging: a higher quality, resealable bag. But no price increase! It took me a second to realize the new packaging contained 20% fewer M&Ms. And Mars is not alone in using this tactic. Food manufacturers are introducing new packaging and varieties with marginally higher expenses but with more significant increases in prices and profits. And the consumers’ reaction? As one shopper put it: “Single serve. It’s worth paying extra for that than getting a big bag.” Another shares that resealable bags are “worth it” to keep the food fresh longer.
Service based companies can also “repackage” their services to increase cash flow. But it may require a bit more creativity. For example, a residential cleaning company can offer a special cleaning “package” for either before or after customers’ parties. Since it would only include rooms used for the party, the “Party Package” pricing could be lower but with a higher profit margin than a full-home cleaning. A two-tier pricing model could be used to reward regular customers who use this service in addition to their regularly scheduled full-home cleanings. (On the other hand, the company may be able to convert first-time “Party Package” customers into ongoing, regular customers with a small, one-time discount if they enroll for ongoing full-home cleanings starting shortly after the party.)
A Wall Street Journal article summarizes this topic in one sentence: “Innovation can resonate with customers—if they are getting what they want.” Which brings us back to the subscription for BK Café. Is the taste of BK’s coffee really what customers want?