The Humble Pie – A Lesson in product design and positioning

7-Eleven has been around for eons now and have made a motser from providing life’s essentials at a convenient time, from a convenient location. Some say the ride is coming to an end with the birth of dial-an-everything. You can even get hot coffee delivered to you via drones thanks to our friends at Wing, a division of Alphabet Inc, trialing in Canberra as we speak.

I’m not one to speak of the demise of the convenience store yet. They’re a pretty smart lot at 7-Eleven, and the following example shows that they know what they’re doing.

In marketing and sales, we spend plenty of time talking about finding our customers pain point and solving it. We also talk about scarcity (or perceived scarcity) allowing the kind of cache that will allow us to extract a better price from our customer’s wallet.

Case in point, the humble pie.

7-Eleven sells two versions of the standard pie, same ingredients, same flavor, the difference lies within the size, the shape, and the price. The standard round pie is 175 grams and costs $3. The traveler pie is rectangular, 195 grams and sells for $4. But still the same pastry, same filling, same flavor, same temperature.

The traveler pie solves a simple problem with pies. Because of the shape, the filling is less likely to end up on your favorite AC/DC t-shirt as you shove it into your mouth. That’s because the whole width of the pie fits in your mouth. It’s easier to eat and as a result you can enjoy it more. So, there is our pain solved.

Secondly, 7-Eleven only stock the traveler pies at a ratio of around 1:4 standard pies. This builds an idea of scarcity which drives the customer to purchase. The convenience that the rectangular pie offers is something the consumer doesn’t want to miss out on.

And what do 7-Eleven get for these two costless exercises? Well, let’s normalize the pricing. The pies are slightly different weights, so we need to take them both to a common pricing method. The pie-cost-per-kilo for a standard pie is around $17.10, whereas the pie-cost-per-kilo for a traveler pie is $20.04. That means 7-Eleven is extracting a 17% margin just because the pie is a different shape and there are less of them. Let’s assume they are making a decent margin on the round pies; this would mean they are getting a significant premium for the traveler.

Now you can assume they don’t just sell one or two of these pies, so this premium would add up to real money. Let’s say they sell 10 traveler pies a day in each store on average. That is 6,700 pies per day at almost $1 per pie. Or in real numbers nearly $2.5M per year.

All just for a different shape. Genius!

So, the question to ask yourself, what pain point can you solve for your customers? Need help working this out, get in touch with Cuckoo today.