3 ways to maximize LTOs using scarcity bias

Limited time offers (LTOs) are effective because people believe they won’t be able to have that meal after a certain period. This activates a mental state called scarcity bias. Airline websites are the best at activating scarcity bias to sell a reservation. You’ve no doubt noticed the call out reading “Only 2 seats left at this price,” which creates an urgency for you to book before the person logged on across town does so first.

scarcity, traffic, demand, brand
Only 3 left at this price!

McDonald’s has an annual goldmine in the McRib. By offering it each year as an LTO, they create excitement and demand that wouldn’t likely be sustained for a permanent menu item. Consumers have told us they don’t plan much for most of their dining occasions. The LTO has to earn a date on the calendar for your brand.

Most restaurant brands intend LTOs to drive traffic in a contained window. Either explicitly or in small type, they’ll identify that is is available for a limited time only. But the assumption is made that consumers register the expiration date on the offer. Without that information, it is unclear that the offer is scarce.

1. How long is limited?

As consumers continue to be buried in ad messages, it gets harder and harder to retain information. When preparing ad communications for an LTO, marketers tend to look at the pieces in a vacuum. Consider all the noise around the piece. There are several key facts that the viewer must take away to be drawn in. First and foremost, how long is limited?
Most brands hide the end date. Test making an end date visible. Consumers will have a timeline to fit the offer into their schedule.

If the offer goes ends up exceeding the end date, it can always be messaged as a positive. Extended due to popular demand.

Be aggressive about reminding your audience that they might miss their chance to try this or have it one last time.

2. Make LTOs special

There are unlimited options. Every day, people can get whatever they crave. It’s important that your LTO has something unique in the market if you want to capture new customers. How unique? Unicorn Frappuccino different. Getting attention isn’t easy. If the brand is focused on scarcity as a strategy, create something hard to find.

If the offer is intended to earn extra visits from current customers, the offer can be something a little less out there. But it has to stand out enough to draw interest and make them put a date on the calendar.

3. The end is near

If every brand were buying network television, this would be terrible advice. But with digital and social channels, updating creative with reminders is affordable and effective. Now that the end date is clear, be bold. Add a count down to digital creative. Be aggressive about reminding your audience that they might miss their chance to try this or have it one last time.

Not ready to be so bold? Test count down messaging for your next offer exclusively with paid social. It can be targeted to a specific area – from a DMA to a single store. This test can inform future approaches and expanded based on results.

Brand recognition vs. Exclusivity

All of these are brands that have an Oreos product on their menu: Baskin Robbins, Burger King, Dairy Queen, Dunkin’ Donuts, Jack In The Box, McDonalds, etc. Drawing in a large audience means finding items with mass recognition and appeal. Oreos has done a great job over the past decade of growing recognition and revising their brand appeal through quirky messages and tone largely on social media platforms.

Media fragmentation has made it hard for impatient brands to build products as quickly as they want. Stunts like the Unicorn Frappuccino or mass media vehicles like Shark Tank are some of the ways brands try to break through.

Oreos’ high awareness makes them an idea partner for product or LTOs. People’s recognition of the name sets expectations for the flavor and experience of the product. This make the product appealing for consumers and for brands in need of hits.

The Oreos logo or the distinctive cookie on the menu board or in a TV tag is certainly a positive. The question is how many different menu boards can have that logo before consumers feel the product is no longer different. Differences, even subtle ones, are what drive favorability and preference for consumers. Jack in the Box new use of flavored ‘butters’ is a good example.

As you can see, the Oreo trend is probably going to be successful for each of these brands. It will ultimately be more successful for Mondelez as they grow awareness and preference for Oreos.

Top QSR menus have plenty of similarities, they are nearly standardized. Hamburgers, french fries, chicken sandwiches, salads and shakes. Burger King has made strides in growth by finding novel takes on these standards going all the way back to onion rings, but including Chicken Fries and the addition of hot dogs. Jack in the Box has focused on the ‘munchie’ set with their tacos and late night special combo offers.

For either brand an LTO is the way to create difference and (hopefully) traffic. Oreo has proven to be a brand that generates interest from consumers; whether to retailers with unique flavor varieties or product partnerships like these QSR LTOs. It is strategically sound to add such a differentiator to the menu as an LTO. Look at the success Sriracha has had in its own partnership and licensing deals.

Oreos, LTO, QSR
Oreos, Oreos everywhere!

But it is less clear whether there is any advantage to having a ‘me too’ product. Once Burger King launches an Oreo product, Jack in the Box should be pursuing other ingredient partners or LTOs altogether. The attention Oreo provides will be there in a diminished capacity.

McDonald’s has its successful McCafe line and its powerful $1 beverage offer that drives value. The Oreo offer for them probably works best to fend off the challengers by eliminating differences in the dessert or beverage category.
The biggest and most visited restaurant chain has made the Oreo shake a standard.

Going back to Sriracha, their rise to near omnipresence on menu boards (and as a flavor additive in CPG products) was inarguably better for their brand than for any of their partners. Having a Sriracha flavored item on the menu became an expectation, not a surprise and delight it was originally, for consumers.

As you can see, the Oreo trend is probably going to be successful for each of these brands. It will ultimately be more successful for Mondelez as they grow awareness and preference for Oreos. The impressions the brand receives through LTO promotion by QSRs is a huge value, though certainly factored into the licensing negotiations.

If there is one way both brands could expand the benefit of partnership or continue to create differentiation it would be to add alternate Oreos flavors to LTOs in lieu of the original flavor. At least one brand has a Golden Oreo variety in some markets. If exclusive, this is a way to get the benefit of Oreos’ awareness and the exclusivity needed to break through parity.

Can the Shark Tank effect drive traffic for an LTO?

Shark Tank, the ABC show in which entrepreneurs pitch their products to investors, has become a hitmaker. The show, based on the international program Dragon’s Den has been airing in the US since 2009. When brands appear on the show, things happen in the marketplace.

For the successful guests, fortunes change visibly. They not only receive investment funding from a famed Shark, but they also earn mentorship and network power – tying into the Shark’s other businesses and processes. These brands tend to blow up in retail. You have no doubt seen clusters of products from the show or even clusters from individual Sharks in retailers like Bed Bath & Beyond, Walgreens and Home Depot.

Even for entrepreneurs who fail to earn a deal, the show has the power to drive interest and sales of the product. Garrett Gee walked away without a deal to fund his app Scan in 2013 but the app became the number one app in the iPhone and Windows app stores due to exposure from the show.

There have been a few dining success stories. Cousins Maine Lobster food trucks earned a deal that has driven their expansion across the country. Grilled Cheese concept Tom & Chee is now in 14 states after earning investment on the show and being featured in updates.

Now, CKE’s Carl’s Jr. and Hardee’s are attempting to earn some capital of their own by partnering with the show. In an episode from 2013, Shark Daymond John invested in a patented boneless pork rib product – Bubba’s Boneless Ribs. The product had been featured in several follow up episodes but success was not immediately clear. In a recent episode, the founder and John appeared in a visit to Carl’s Jr./Hardee’s headquarters to finalize a deal to provide the product for the new Baby Back Rib Burger.

The brands have made overt efforts to turn their image away from the sexy girls eating messy burgers. The appearance on Shark Tank is not exactly aligned with the more dramatic efforts the brands have made, but certainly a departure from the bikini era.

The show claims 8-10 million regular viewers, no mean feat in today’s fragmented media environment. CKE reached a group of consumers with information about a product they had been learning about for 4 years to announce their new sandwich. Where the brands may have missed on reaching a mass audience with their recent activation on Twitch, they have capitalized on this loyal audience with a strong product introduction.

There are two related questions. First, who exactly did they reach? Assuming the brands are driving in include a slightly more balanced gender in their new media strategy; they have achieved that. But from an age standpoint, they probably missed their largely young male audience getting a large portion of Gen X and Boomers (gasp) in this Shark Tank play.

Second, will viewers turn out for a sandwich like they have for products like the Scrub Daddy? The top performing products have tended to be no-brainers, like a better sponge or a simpler way to exercise. This burger is far from a no-brainer for average consumers. It will appeal much more to males, and hungry males at that. What is not known is the cost CKE paid for the appearance, if any. Without that data, it is impossible to judge the move.

Time will tell whether the Shark Tank effect can carry an LTO.