The Herald Bulletin

Morning Update

Columns

October 1, 2013

Emmett Dulaney: Sandwich costs more on east side?

One of the more clever indices used to compare countries is the Big Mac Index. Since 1986, this ratio has been used to compare the exchange rates between countries and see if the currencies are correctly valued.

For example, if a Big Mac costs $4 in the United States, then you should be able to convert $4 to the currency used by another country and – theoretically – that is what the Big Mac should cost in the other country.

If the values don’t align, then the currencies are either valued too high or too low to one another. One major problem with this line of comparison is that it is difficult to arrive at an answer to a very base question: What is the price of a Big Mac?

Over the Labor Day weekend, I collected pricing information at the drive-thrus in the area. One might think that prices would be consistent between locations, but they would be wrong. A Big Mac sandwich varies by 3 percent based upon whether you are purchasing it near the interstate (both the 5233 S. Scatterfield and Daleville locations) or away from the traffic (2014 N. Scatterfield, Downtown, and Broadway locations) and the price of the Big Mac value meal – you almost always want a drink and fries to go with it – fluctuates by a dime.

The Big Mac choices are far from the only menu item on which prices vary, and the one that is the most noticeable is the Southern Style Chicken Sandwich meal, which can differ by up to 5 percent. If you purchase the meal at 2014 N. Scatterfield, it will run you $5.69. If you drive Downtown or to Broadway, the price climbs to $5.79. If you order at the 5233 S. Scatterfield or Daleville locations, the price jumps to $5.99.

From a marketing standpoint, one of the most notable gurus in the marketing field, Philip Kotler, would be pleased by the variations in price and has often commented that one of the most common mistakes in the marketing mix is that “price is not varied enough for different product items, market segments, and purchase occasions.”

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