Industry News | January 19, 2012
Affinnova Helps Sbarro Optimize its Pricing Strategy
Facing rising food costs and softening industry traffic, Sbarro turned to Affinnova, Inc., the global leader in marketing innovation software and services, to help strategically optimize its menu pricing.
Understanding that traditional point-of-sale tracking data would not provide enough guidance, Sbarro used Affinnova’s technology to perform a holistic review of its pricing strategy.
Using Affinnova Price Advantage to directly engage Sbarro guests, Affinnova tested six price variations across 45 menu items. Guests responded to realistic pricing scenarios, and their reactions were tracked as price increases and reductions were applied throughout the test.
Affinnova also tracked how individual guests switched from item to item when faced with changes to the pricing and menu offering. Altogether, thousands of variations were tested and evaluated.
Data was aggregated to develop price curves for individual menu items. In addition, Affinnova built a price simulator that Sbarro senior executives can continue to use to model guest reaction to pricing changes.
Finally, a customized contribution index analysis enabled Sbarro to prioritize the role each individual menu item could play in their strategy.
According to Sbarro’s Chief Marketing Officer, Mark Censoprano, “Affinnova has one of the most advanced methodologies and analytics that I have seen in the industry. Their use of forward-looking data to understand how our guests trade in and out of individual menu items based on price changes means we can be surgically precise in how we re-engineer our menu for optimal profit and traffic.”
Price Advantage can also account for competitive and category demand shifts and produces single-product and cross-product price sensitivity analysis and simulated market scenarios. This provides pricing recommendations based on current consumer sensibilities.
“We’re pleased to have the opportunity to work with Sbarro on such a strategic initiative,” says Waleed Al-Atraqchi, president of Affinnova. “We’re committed to providing our clients forward-looking solutions, powered by technology, that help them understand the market of today so that they can reshape it tomorrow.”
Food & Beverage
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