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Term paper on Business: Product Pricing Component

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Term paper on Business: Product Pricing Component

Post  Admin on Fri Jan 22, 2010 6:46 am

Choice of An Organization
The selected organization for the following paper is the world famous chain of fast food restaurants, McDonalds, offering a wide variety of fast foods for the current breed of equally fast paced new generation and the elderly alike.

The Utility of the Products Offered By McDonalds
One of the foremost and important utilities offered by McDonalds is the range of fast food recipes that have become a standard choice for the millions of youngsters and elders alike across the globe. Even in developing nations with a low emphasis on western style of foods and recipes, such as India and Russia, McDonalds has been truly effective in capturing a sizeable market share of the fast food industry. Perhaps the strongest factor to attract the customers by the McDonald chain of restaurants across the world is the maintenance of unique taste offered, irrespective of the nation and country where the McDonald offers its wide range of fast foods. Second, it is also a known fact that aside from the unique quality of the foods offered, the maintenance and standard of service too has been one of the hallmarks of the immense success for the McDonald chain of restaurants across the globe. Third, and perhaps the most important factor is that of its prices. The range of prices for the variety of fast food recipes has been kept and maintained according the level of the average income group in each country. Hence, one need not be a millionaire to enjoy a small brunch at McDonalds, wherever he or she is, and in any corner of the world.

The Nearest Substitute of McDonalds
As of date, one of the strongest and closest substitutes to both the variety and standard offered by McDonalds is that Kentucky Fried Chicken, also commonly known as KFC. KFC's success too has lead to an equally sizeable market share, yet it has one drawback, one that has a negligible affect while in competition with McDonalds. This drawback is that while McDonalds offers both beef and chicken products as part of its wide range of delicacies, KFC has limited its range to offer products made from chicken only, thus catering to the lovers of edibles made from chicken only.
As for the competitiveness in the pricing structure of both McDonalds and KFCs, it may well be observed that when ever McDonalds has a new and changed recipe in the market, KFC is quite prompt and quick in bringing a similarly priced product, though the recipe may only include chicken. Perhaps the strongest factor that links both these multinational organizations is their emphasis on maintenance of quality and standard of service that are more or less of similar standard.

Elasticity or Inelasticity of Prices
A skeptical view of both the fast food chain of restaurants reveals that both follow a similar pattern of pricing, and even though products at KFC are limited to products made from chicken, both McDonalds and KFC can be observed to be engaged in a price war that continues all the year around with each new product introduced with an equally new attraction and incentive. This is accomplished through the vigorous and truly picturesque marketing and advertising campaigns pursued by each of the two fast food chain of restaurants.

While one organization introduces a new edible and delicious recipe, the other is bound to respond with its own new product, yet the pricing structure of both the organizations are kept at a level that makes the choice of the average consumers truly difficult, hence maintenance of truly competitive environment in all respect.

Issues Affecting Consumer Demand and Pricing
Though there appears to be negligible evidence of any issues on both demand and pricing of products of both the organizations, yet there are instances where one organization may lead the other in capturing a larger share of the market share. These include for example the issue of using beef products by McDonalds, and chicken only by KFC. In each case the primary issue that arose was that both the organizations imported their raw materials, frozen beef by McDonalds, and frozen chicken by KFC from their parent organizations. However, as of current strategies, both the organizations have changed their strategies and instead are known to use raw materials from within the country where they have their outlets, provided the same is available and meets the standards and quality as accepted by the parent organization of each fast food restaurant.

Strategies to Enhance Revenues
One of the first measures that could be introduced for enhancing the revenue in each of the organization is to offer products at prices that meet the lower-income group, rather than focus on the average middle income group as evidenced in the present day practices of each organization.

Second, though the name of each organization is itself a mark of both quality and standard, yet the same could be slightly altered to attract a larger segment of the average population, who perhaps likes to stay away from the otherwise dominating western culture, including food.

The attire of the employees too could be slightly altered and changed according to the local trends and traditions of the respective country, which is yet another attractive incentive to attract those who prefer their own dresses and trends, as compared to the western style dresses worn by employees of both the organizations worn across the globe.

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