A Clever Cookie

An interesting example was the cookie price wars in the US, an interesting account of which was reported by The Wall Street Journal.

In the United States, city councils use girl scout troops to sell cookies to raise funds. Now the Girl Scouts USA follows a law which prohibits price fixing. Hence all councils are free to set their own price for a jar of cookie.

So when a large 36,500-member Michigan Metro Council citing higher costs raised the price per jar to $ 3, while the neighbouring Macomb County Girl Scout Council stayed at $ 2.50 per jar, a marketing battle broke out.

To battle this price difference, the Michigan Metro Council decided to differentiate its offer. It asked its troops to explain to the consumers that their council served four times as many members as the Macomb Council, and ran three more camps. It also asked them to explain that the higher price meant higher profits for Michigan Council Girl Scouts to fund their bigger scale of activities.

But even then many consumers did not understand the difference. In spite of the fact that Macomb County Council the smaller council asked its members to refrain from flaunting their price advantage, the task was difficult. Since girl scouts' field trips depended on number of boxes sold, they ended up using the cheaper price as a bait. Many consumers, even though they knew why Michigan Council cookies were more expensive, could not buy a jar at $ 3 when everybody else around them was buying them from Macomb at $ 2.50. One parent was quoted as saying, "Some people do not care if your girl is that special girl. They are going to buy the cheapest cookies they can find." Thus the larger quantity of Macomb Council sales started the word-of-mouth publicity which prevented the genuine differentiation of Michigan Council to gain ground.