A burger for £85?
Ezra Klein just posted an interesting observation about the new proposal by Burger King to serve up the world’s most expensive burger that will cost a whopping £85.
This burger will contain top-quality Kobe beef from Japan. And instead of ketchup and cheddar, it will be garnished with foie gras and rare blue cheese.
What Ezra suggests is that while it is clear that almost no one will buy the burger, the very fact that Burger King has it on the menu could make people think more highly of the quality of the burgers at Burger King—even the 99 cent burgers.
One other effect of this expensive burger could be that it will shift people’s willingness to spend money at Burger King. If the standard for spending before this new up-scale product was £5, perhaps after this introduction, spending £7.5 will seem much more reasonable (at least relative to the £85 burger).
I would love to see the effect of this new offer.
Irrationally yours,
Dan
Another fallacy of supply and demand, but indeed this is a very smart act to promote Burger King. At the same time I feel sorry for those customers who are affected by the fallacy, they probably don’t need more junk food as it is.
Jose Silva just pointed me to this other link
A $1,000 omelette — next to it the $100 version must seem cheap
http://news.bbc.co.uk/2/hi/americas/3724497.stm
But then the question becomes, if you get the $100 omelet, don’t you feel shortchanged that you didn’t get the $1000 omelet? You’ll always feel that nagging doubt, that sense of failure, that self-loathing of the second-best.
I remember reading like this about cars at the end of chapter 1 of a book with an orange-and-blue cover whose title escapes me at the moment.
There’s a free omelet for you in Emeryville when you come by. (I think the orange-and-blue book said something about free as well.)
J
I always seem to be on a different wavelength here, but Jay, why do you “feel sorry” for customers affected by the fallacy? And, if all of this holds true, maybe the gas companies should offer an alternative to gasoline that costs $80.00 a gallon so that we feel like we’re getting a heck of a bargain at $4. Or, would we feel shortchanged if we’re not getting the “good stuff?”
@Deb – Brilliant! Maybe this will help: The price in the UK right now is equal to $10 a gallon. How cheap does your $4 sound NOW?
@Dan – Your book was fascinating. I enjoyed it very much. I just finished listening to it (from audible.co.uk). Got the PS at the end to come here!
Lewis
A station in my town sells super premium gas for $7.50/gallon. (I’m in the US, so that’s almost double the cost of normal gas).
BK cashier at drive through window, “OK, I’ve got two £85 foie gras, rare blue cheese, kobe beef burgers – would you like that with Lipitor?”
This has indeed been getting a lot of press in the marketing/brand/PR/advert circles and many seem to think it a good move. I’m a big fan of BK’s marketing efforts in general, but I don’t agree with this one. Everything they’ve done the last several years has been smart and showed thought leadership. This type of stunt has been done before, and will be done again. Here’s my full take:
http://eyecube.wordpress.com/2008/04/29/burger-king-narrative-dissonance/
Having just read Predictably Irrational and thoroughly enjoyed it (keep sticking it to that Tim Harford guy!) I fear I may have been led into error.
As you may know, in the UK (where I live) all drugs dispensed through our NHS are the same price to the patient. I’ve just been persuading my GP to tell his patients that they’re very very expensive since according to you that should increase their effectiveness. Somewhat to my alarm, he agreed immediately… so how do I do a cost-benefit on the advantages of this as against the disadvantage if a patient realises that he’s been fibbing?
I disagree; I believe the price of £85 is so ridiculously far above the rest of the market for burgers (by well over ten times, even compared to nearly any restaurant) and the features so far above any other burger that it won’t enter into people’s comparisons at all. People won’t find it to be a useful comparison, even on a subconscious level. Using it as a comparison point makes decisions harder, not easier, and the fundamental principle behind this method is that we use extraneous information to make decisions less difficult.