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Markets in everything, hedonic pricing edition parts I and II
Burger King recently introduced a Facebook app called Whopper Sacrifice that allows users to delete ten of their friends in exchange for a Whopper sandwich. Watch the app in action.
Here is much more and thanks to Alex Sheets for the pointer. It also gives you one way of implicitly valuing what Facebook is worth. For another recent exchange, get this example, courtesy of Damon Richardson:
First-time vendor Pasang Sherpa said when the
Metropolitan Museum of Art auctioned off the sales rights to two of its
corners, he decided to pay an additional $81,701 to sell his hot dogs
near its north-side entrance, the New York Post said Wednesday. The cost increase, which represents thousands of hot dogs in
Sherpa's world, was acceptable for the vendor despite only being 100
feet away from the site's south entrance. "That (north) side is more busy," Sherpa said of his new sales
locale at the tourism site that more than 5 million people visit each
year.
Posted by Tyler Cowen on January 9, 2009 at 09:17 PM in Web/Tech | Permalink
Comments
Testing comments...
Posted by: Tyler Cowen at Jan 9, 2009 9:18:44 PM
Regarding Facebook's newly-discovered value: This unbridled extrapolation seems typical of economic analysis:
1. He assumes people accurately know the price of a Whopper. Since when? I don't. I made a point of guessing ($3.25) before reading the real price: $2.40.
2. Since when is deleting a friend permanent? How can you assert that friends aren't just going to add you back.
3. He assumes all friends are valued equally.
Posted by: Jeremy at Jan 9, 2009 10:24:05 PM
While I'm at it, there's a couple of other things:
4. He assumes that nobody is doing this as a prank on their friends; and
5. He assumes that none of the users are going this out of curiosity to see how the new feature works.
Kind of a lot of assumptions to declare, "What BK has unwittingly done here is provide a way to determine the valuation of Facebook."
Posted by: Jeremy at Jan 9, 2009 10:31:03 PM
Interestingly, as soon as I saw this post, I installed the application and started to sacrifice someone with whom I had little contact. When it told me the person would be notified, however, my strategy changed. Now I will sacrifice people who know me well and who will not be offended.
Posted by: Jeff H. at Jan 9, 2009 10:49:48 PM
I'll gladly unfriend you today for a hamburger Tuesday.
Posted by: at Jan 9, 2009 11:02:31 PM
When it told me the person would be notified, however, my strategy changed. Now I will sacrifice people who know me well and who will not be offended.
Brilliant. They are getting you to spam your friends with a personalized recommendation of Burger King products. This is Beacon reloaded.
Posted by: at Jan 9, 2009 11:08:00 PM
I just sacrificed Tyler...my coupon is in the mail.
Posted by: Jeff H. at Jan 9, 2009 11:14:06 PM
Oh, whoops. I thought I did, but he escaped somehow and someone else took his place.
Sorry for all the comments, but it's all in the name of science.
Posted by: Jeff H. at Jan 9, 2009 11:21:05 PM
Burger King's marketing campaigns are exceptionally well done. From the subservient chicken, to their Xbox games, to things like this, they know exactly how to get people talking about their product.
Posted by: Rex Rhino at Jan 10, 2009 1:10:31 AM
"Burger King's marketing campaigns are exceptionally well done." I was going to post something similar. It's always fun to see what they're going to do next.
Now maybe those people with 1000 random people they don't really know can start cashing in.
Posted by: Vernunft at Jan 10, 2009 3:02:42 AM
"First-time vendor Pasang Sherpa said when the Metropolitan Museum of Art auctioned off the sales rights to two of its corners, he decided to pay an additional $81,701 to sell his hot dogs near its north-side entrance, the New York Post said Wednesday."
For five-year rights, I have to think there's winners' curse there. $362,201? Really? Especially since the corner is under construction.
Posted by: Ted at Jan 10, 2009 7:13:43 AM
Sums up Burger King and Facebook. Sh_it morals, sh_it product. Oh and sums up marketing as well, a load of sh_ite.
Posted by: cheale at Jan 10, 2009 9:37:50 AM
Are there ten people who want to enter into a conspiracy with me to friend one another, then de-friend one another for a whopper, then friend one another, then de-friend one another, etc. etc. ad infinitum?
In fact, anyone wanna write a quick script to do it automatically?
Pave the roads with free whoppers.
Posted by: Paul Gowder at Jan 10, 2009 10:44:34 AM
"First-time vendor Pasang Sherpa said"...what else should we know about Pas?
The fact that he can come up with $81k/yr suggests his ("nth-time") previous venturing was..
..successful, but not-so-successful as...sellin truckloads ~20kdogs/yr...500 hotdogs/day...that is the differential between the N side entrance and, 100 ft away, the S side entrance.
So of course we need to hear his rationale, his Business Plan..model...somethin..
"That side is more busy."
Then, as our mouths drop open, he crams down a dog or 2 and we owe him $5.
Another 100 times, and at the end of the day, he will have caught up to his poor friend sellin dogs on the S-side.
"First time vendor" a worry for the bank loaning him the $81K, yes?
Posted by: calmo at Jan 10, 2009 3:46:20 PM
Another problem with this valuation is that each additional un-friend is worth more. If you have 100 friends then un-friending 10 of them is no big whoop. If you only have 20 then it is. Plus he assumes that an average user (with 100 friends?) axes all of them. That's never going to happen.
However it was an interesting thought experiment. I'll like to see some stats from BK about how many burgers they've given away for this and what the average number of friends a user had when they decided to off someone.
Oh and each burger isn't "worth" $2.40. This is the cost of advertising. I'll be interested to know if it brings in new customers (which are worth more) or repeat ones.
Posted by: BlogReader at Jan 10, 2009 4:07:55 PM
Burgers are a loss leader anyway. When you show up to claim your free Whopper, they will probably upsell you the proverbial "fries with that" and a drink, with nice fat profit margins.
Posted by: at Jan 10, 2009 6:32:55 PM
And don't forget the free advertising from the press coverage.
Posted by: Ted at Jan 11, 2009 4:28:54 AM
My personal favorite Burger King campaign of late is the one for the Flame.
It is male body spray made to smell of seduction and a hint of flame broiled meat.'
The website for it is quite brilliant.
Posted by: Chris at Jan 12, 2009 1:14:12 PM
I have 6 childern and have always taken my family to burger king until now.
Your new Sponge Bob square butt commercials show what is wrong with society
today trying to promote "booty calls" to kids. "I like square butts"? I'm
done with BK.
Posted by: kikr berg at Apr 10, 2009 6:51:52 PM
