Saturday, November 17, 2007

Differentiating the Process

Businesses in Monopolistic Competition work hard to differentiate their product or service. Often they do this through marketing. The classic four P's for marketing a product are Product, Price, Promotion and Placement. However, services make up 80% of the US economy today and those involve three additional P's - People, Process and Physical Evidence.

Two stories in today's business section of the Arizona Republic focus on companies working on Process. Papa Johns wants you to order pizza via text messaging.

Pizza chain Papa John's International is about to start taking some new phone orders, but this time there won't be a voice on the other end.

The restaurant chain is rolling out a service that lets customers order pies via text message. Customers first create an account online where they save as many as four different "favorite" orders that include any combination of pizza, sides and drinks, as well as a delivery address or carry-out information and payment type. Once that's complete, customers can send a text message at any time using the shorthand "FAV1," "FAV2," "FAV3" or "FAV4."

In addition to differentiating their service, I suspect that text message ordering is less costly than talking to someone on the phone. Dutch Bros. Coffee wants to change how you order coffee.

The drive-through and walk-up coffee shop seems to be a hit with ASU students and staff, in part because first-timers get a free cup of coffee. And that deal applies to anyone, not just those with university connections. The shop tries to breed loyalty and attract repeat business from customers who want staffers to know their names as much as they know their regular coffee orders.

"They're nice, they're friendly, they remember my name and she (the clerk) knows what I want even before I get there," said Tim Clark, 27, who pulled into the drive-through recently in a red Toyota Land Cruiser.

Rather than talk through an intercom box, customers order their drinks at a drive-up window.

Thompson and his regional manager Dave Vines said the system is faster than other drive-through setups and gives customers the added personal touch of more direct human contact.

"It's all designed for speed," Vines said. "And we believe you should never turn your back on a customer."

Taxes are included in the price of drinks so customers don't have to fumble with pennies and odd change. Cash is deposited into an old-fashioned cash box.

Again I suspect that this approach will decrease costs and increase profits. Note that fast food restuarants do most of their business through the drive through window.

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