The Delivery Hero Case

Few weeks ago, Delivery Hero had its earnings call. After the call their share price fell more than 30%.

A couple of days after Katya Rozenoer, co-Founder of DelivApp, posted on LinkedIn some inconsistencies in the speech of Niklas Östberg (CEO of Delivery Hero) during the call.

Basically, he said that the game plan in the Korean market would be to stop promos, lock in customers, improve results. While in Turkey the strategy to follow would be, because of the entrance of a competitor in the market, make promos to win. Which assumes that for their competitor, the result is to stop promos, loose customers, worse results.

The ending of the post was:

I just don’t get this promo game. If anybody does — please explain!

I think I have got an answer:

The game is not about promos.

What then? You might ask. The answer is Game Theory.

In order to illustrate, I have run a little experiment:

Imagine there is a given market (with one single product) with around 10.000 customers (this number is not important). All of them with a given sensitivity to price based on age, sex, and some other random factors.