Marketing and psychology
Why the Wendy’s Dynamic Pricing Fiasco is a Great Lesson for Marketers
We evolved to crave predictability. Negative emotions can be triggered by this craving. Too bad for one fast-food CEO…
This piece originally appeared as the intro to the most recent edition of my Discomfort Zone newsletter, which covers brands, culture, and tech.
You’ve probably heard of “surge pricing” and “dynamic pricing”. And you’ve definitely heard of “Wendy’s”.
A few weeks ago, all of those words started appearing in news items when new Wendy’s CEO Kirk Tanner announced an investment in digital menu boards at US company-operated restaurants by the end of next year and added that the chain would be testing dynamic pricing.
Big mistake! Cue outrage!
Mainstream media immediately misreported this as “surge pricing”, which is what rideshare app users encounter when it starts to rain and their Uber fare suddenly shoots up as demand increases. Although the difference is subtle, dynamic pricing is the raising and lowering of prices when there’s a limited supply of inventory such as airplane seats for a specific flight, or hotel room vacancies for a specific night.