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Checker's Pizza-Industry Leader

Based on the situation below, what will happen to the supply, demand and price of the product in the short and long terms. And what would the ethical implications be?

Checkers Pizza was one of the first to offer home delivery service, with overwhelming success. However, the major pizza chains soon followed suit, taking away Checker's competitive edge. Jon Barnard, Checkers's founder and co-owner, needed a new gimmick to beat the competition. He decided to develop a computerized information database that would make Checkers the most efficient competitor and provide insight into consumer buying behavior at the same time. Under the system, telephone customers were asked their phone number; if they had ordered from Checkers before, their address and previous order information came up on the computer screen.

After successfully testing the new system, Barnard put the computerized order network in place in all Checkers outlets. After three months of success, he decided to give an award to the family that ate the most Checkers pizza. Through the tracking system, the company identified the biggest customer, who had ordered a pizza every weekday for the past three months (63 pizzas). The company put together a program to surprise the family with an award, free-food certificates, and a news story announcing the award. As Barnard began to plan for the event, however, he began to think that maybe the family might not want all the attention and publicity.

Discussion Questions: (This could be worked into the answer.)

1. What are some of the ethical issues in giving customers an award for consumption behavior without notifying them first.
2. Do you see this as a potential violation of privacy?
3. How would you handle the situation if you were Barnard?

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Solution Preview

The ethical considerations include the fact that the owner is assuming that the customers will want the award in the first place. The problem states that the owner has created a secret contest where he intends to surprise the winner(s) by lavishing them with food gifts while the local media outlet covers the event. Again, most people will likely enjoy winning such a prize, but there is a very good possibility that someone who does not want to even enter a contest might win. In addition, the press coverage might be embarrassing for the winner(s) as personal events including the condition of their home/real estate, their dress/attire at the moment the prize is surprisingly announced, or events occurring at the time the award is presented might not necessarily be conducive to a cheerful media event. Because of this, the owner of the pizzeria should certainly, at the very least, contact the potential winner before presenting the award with media in tow. In a best case scenario, the owner should have announced the ...

Solution Summary

The solution describes the effects upon supply and demand both in the short and long term from changes in strategy from a market leader-Checker's Pizza. Ethical issues related to a promotion the firm has planned is also discussed including an outlay of possible solutions to the situation.