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Tuesday, September 25, 2018

Strategic CSR - Domino's Pizza

Years of reading and thinking about business (and CSR) have taught me that it is generally not a good idea for firms to over-estimate their customers. In spite of this, it happens frequently. A good example of this a few years ago was Coca-Cola's campaign to donate a percentage of sales to preserve the polar bear's habitat in the Artic. One problem – customers confused the white (= snow?) can selling regular Coke with the silver Diet Coke can. They also started reporting that the Coke tasted different. Coca-Cola, still traumatized by the New Coke fiasco in the 1980s, immediately withdrew all cans from sale and halted the campaign. The article in the url below reminded of the Coke polar bear incident. This time, Domino's Pizza launched a campaign in Russia promising pizza for life to anyone who had the firm's logo tattooed on their body. As The Wall Street Journal reports, Domino's clearly "underestimated how much Russians love free food."
"Bargains and freebies are powerful draws here. The Soviet period—where foodstuffs were often cheap but in short supply—and the economic hardships of the 1990s have conditioned many Russians to pounce on a good deal. A stagnant economy has left average disposable incomes stuck around $500 a month, and Ms. Koshkina [a customer 'who got a small Domino's logo tattooed above her left kneecap'] said the free pizza would help her put aside a bit of money from her salary working at a piercing and tattoo parlor. 'Who doesn't want free food?' she said."
Originally scheduled to last two months, Domino's suspended the campaign after only a few days as interest soared:
"A spokesman for Domino's Pizza Inc., the U.S.-based owner of the Domino's Pizza brand, said the Russian franchisee had been overwhelmed by the response, receiving more applicants in days than it had expected in months."
Again, the goal should be never to over-estimate your customers:
"Domino's announced the launch of its tattoo promotion—named 'Domino's Forever'—on its page on VKontakte, the Russian equivalent of Facebook , on Aug. 31. The conditions were minimal: Applicants should post a photo on social media of a real tattoo in a visible place with the hashtag #dominosforever. They would receive a certificate allowing them to receive 100 free pizzas a year of any size for 100 years, the company said. Russians hurried to tattoo parlors."
There are several examples of the tattoos in the online version of the article, with Domino's first placing narrower rules for those who qualify and then, after the number of postings piled up, cancelled the campaign altogether:
"Domino's later said 381 people qualified for free pizza in the four days or so that the promotion was running."
The logic driving those who wanted to get tattoos was far from failsafe:
"At his parlor in Moscow, Mr. Gonyshev, 29, said he tried to persuade the students not to add the tattoos, because it wasn't clear they would qualify for the free pizza. He said they replied that the logo was pretty cool and went ahead anyway."
Take care
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Domino's Free Pizza Offer Backfires in Age of Ink
By James Marson and Thomas Grove
September 17, 2018
The Wall Street Journal
Late Edition – Final