Caption: Sometimes too much is too much

Caption: Sometimes too much is too much
Image Credit: Matt McGee

So how did your product start out? I suspect that your company discovered that a group of potential customers had a problem, created a product development definition to solve that problem and then went out and sold a product based on that. With a little luck, both you and your company were successful doing this. When you wanted to boost your sales, you looked around for potential customers with problems that were similar to the one that you were solving and added features to your product to solve those problems also. Sounds just like what product managers are supposed to have on their product manager resumes right?

The Problem With Adding More And More

As product managers it can be all too easy to get caught up in what our products look like right now. We want more customers and so we try to expand the existing product just a bit to make this happen. It’s what happens when we do this over and over again and forget to consider what the big picture looks like that can cause us problems.

Over at the McDonalds chain of restaurants, their product managers have run into this very problem. In a nutshell, their menu has become way too big. Seven years ago the McDonalds menu had 85 items on it. Today it has 121. As product managers we know exactly what has happened – McDonalds has added items to their menu in order to attract more customers and now their menu has become too large.

Despite being one of the largest and most successful restaurant chains in the world, the McDonalds product managers still have to deal with a fair share of competition. Specifically, restaurants chains that are both smaller and more focused are starting to steal McDonalds customers. These chains include 5 Guys Burgers, In-And-Out Burger, Chick-Fill-A, and Chipotle. McDonalds is most interested in retaining the 20 & 30-somthing customer who has shown a desire for the fast casual dining that these competitors do so well.

The result of this stuffed menu at McDonalds is that service at McDonalds has become much slower over the past few years. McDonalds’ goal for getting customers through its drive through is 90 seconds. A recent survey by a trade magazine reported that McDonalds’ speed of service had reached its slowest time in 15 years: 189 seconds. This is more than twice the McDonalds goal. Clearly there are a lot of problems here that need to be fixed.

What McDonalds Plans On Doing About Their Super Size Menu Problem

McDonalds is a large organization that has a number of very smart product managers working there. They are both aware of the fact that they have a problem and they are working to find ways to fix it. They realize that there will not be a single “silver bullet” change that they can make to fix all of their problems, instead they are going to have to discover the collection of changes that they are going to have to make in order to make things better.

The first step in this process is to work with their franchises to get them to boost their staffing levels during peak times. A number of the new menu items that have been added are internally called “show stoppers” because they take so long to prepare that they bring the kitchen to a standstill. Having more staff on hand to take care of these types of orders should help to speed things up.

The McDonalds product managers are also going to try to change how their customers both order and pick up their food items. They call their new system the “dual point” system. In order to increase efficiently, customers will now place their order at one end of the counter and then pick up their assembled meals at the other end of the counter.

Finally, McDonalds understands that in order to compete better, they are going to have to get good at offering more customized food items. This means that they are going to have to both offer more ingredients for their sandwich toppings while at the same time speeding up the sandwich assembly time. To accomplish these goals, the McDonalds product managers are going to install new preparation tables in their kitchens in order to provide the room to accomplish all of this.

What All Of This Means For You

Product managers always want to get their product into the hands of as many customers as possible – this is a fundamental part of our product manager job description. However, if we’re not careful, our product can grow out of control and become too large and unwieldy if we don’t keep a careful watch on it. This situation can sneak up on us and we need to make sure that we don’t let that happen.

Over at the McDonalds chain of restaurants, this very thing has happened to them. As they have expanded their menu to appeal to more and more types of customers, their menu has grown to become too large. Their ability to deliver food in a timely manner has been greatly impacted by this. The McDonalds product managers are trying to fix this problem by making a series of changes. These changes include having more staff work during peak periods, changing how food is ordered and picked up, and adding work tables to allow more ingredients to be used to customize orders.

McDonalds is probably a larger company than the company that you work for. If they can have the problem where their product becomes too large and complex to sell well, then of course this could happen to us also. What we need to do as product managers is to go eat at McDonalds and watch how they make changes to the way that they fill our orders. This should be very interesting to watch!

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: Do you think that McDonalds should take steps to make their menu smaller?

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What We’ll Be Talking About Next Time

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Can your customers handle it if you tell them the truth?

Can your customers handle it if you tell them the truth?
Image Credit: John Irving

How much does your product cost? No, I mean based on your product development definition how much does it really cost? Once you account for all of the taxes, installation fees, ongoing maintenance, how much are your customers going to end up paying to use your product? Perhaps even more importantly, how are your customers going to feel as they start to discover the trail of additional fees above and beyond the initial purchase price that they are going to have to end up paying?

The Problem With Concert Tickets

If you have purchased tickets for a concert or a sporting event in the past few years, you know that there is a big problem with the way that these tickets are priced. The cost of the ticket is often not what you end up paying. Instead, there are a number of addition fees and service charges that get tacked on to the price that can significantly boost your final cost.

A good example of this are tickets to a recent Justin Timberlake concert. An upper-level ticket has a price of US$400. However, there is an additional $199.50 service fee per ticket. Service fees can also include a $7.50 electronic-delivery fee and a $11 shipping fee for paper tickets.

The addition of these fees has been the #1 complaint of customers for quite some time. StubHub competes with other firms such as Live Nation Entertainment and so how they price their tickets can have a big impact on how much business they do.

How StubHub Tried To Solve The Concert Ticket Problem

After having interviewed their customers, StubHub decided to do something about the ticket pricing problem. What they did was to eliminate all hidden fees associated with tickets. StubHub now offers an “all-in” price: what you see is what you will eventually pay. This sure sounds like something a product manager could add to their product manager resume.

The problem with what StubHub has done is that now their tickets appear to be more expensive than the completion. As a result SubHub’s sales have fallen as fans choose to go with other web sites that list tickets that have lower base prices and hide their fees.

StubHub realizes that they have a problem. They are taking steps to deal with it. They have been cutting back the fees that they charge to both buyers and sellers. This will, of course, cut into StubHub’s profit margins. Buyer fees have been cut to as low as 2% and seller fees have been cut to between 6% – 15%. StubHub believes that over time their customers will learn that their pricing offers them a better deal than the other sites.

What All Of This Means For You

As product managers we all have a two-sided relationship with our product’s price. We’d like to charge as much money as is possible in order to boost our company’s bottom line and make ourselves more important to the company. This is almost a part of every product manager job description. However, we also realize that if our product’s price is too high, then we may end up scaring away potential customers.

Over at StubHub, they’ve taken the bold step of creating a single price for their products that they now present to their customers. This price incorporates all of the additional charges that the customer will end up paying. However, they’ve discovered that customers now believe that their products cost more than other products that have additional tack-on fees. StubHub believes that their customers are learning about the value of their prices, but they have taken a hit to their sales in the short term.

Providing your customers with a single unified price that accurately represents what they are going to end up paying you sounds like good business. However, customers are not always smart enough to realize the value that you are providing them with. If you are willing to take a short-term hit to your sales, providing one accurate price may be a way to make your product stand out from the pack.

- Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: If you do offer one all-encompassing price, how long should you stick with it before you’d revert to your old way do doing pricing?

Click here to get automatic updates when
The Accidental Product Manager Blog is updated.

P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

How great would it be to be a product manager who was in charge of a product that was showing up in the newspapers every day? Box, a company that offers online storage, is preparing to have an Initial Public Offering (IPO) where they will sell stock in the company for the first time. It turns out that this is all great, but the Box product managers are facing some serious competition and it’s not 100% clear what they are going to do in order to deal with it…

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