Strategic Market Pricing and Smalls’ Premium Steakhouse
By: Andrew Smalls
Professor: Irene Zoppi
MKT 402, Pricing Strategies
February 1, 2015
Strategic Market Pricing and Smalls’ Premium Steakhouse
A Premium Dining Experience
If given the opportunity to open a restaurant, it would be an upscale restaurant catering people who the desire to have excellent food and a premium dining experience. I would name this establishment Smalls’ Premium Steakhouse. My name inspires the name of the restaurant and, of course; we would specialize in all sorts of steak from filet mignon to steak burgers. My focus would be on serving premium foods at premium prices. Our differentiation factor would be the quality of our unique service. We would
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Price setting will involve the cost of food, labor, how our direct competition is pricing, and what our guest are willing to pay. Thus, our target market needs to reflect this willingness to pay (Kooser, 2014). We want our patrons to perceive the prices as an indicator of the value they will receive. The customer service and amenities are part of our value pricing as well. Next step in my strategy is to create a price structure. We will have the typical items that you can purchase from the menu in the form of price per meal, or the patron can build their meal and pay a-la-cart. The object of this pricing is putting the control into the customer’s hands. They can pay for whatever they feel offers them the most value. For instance, it reduces waste and will save the consumer money to order a vegetable with their steak and leave off the potato. This price structure will resonant well across our healthy consumption segments. Ultimately, the success of our pricing strategy will depend on our customer’s willingness to pay for the perceived value (Nagle, Hogan, & Zale, 2011). Lastly, is to offer very little in the form of discounts with the exception of marketing items to repeat customers. Sending a ten percent off coupon to a patron that has not visited the restaurant in a period is a way of getting them back into the restaurant without compromising much in the way of value. A separate part of our price strategy would be a loyalty program that we would track
Pearce, John A. , & Robinson, Richard B. . (2009). Strategic management. formulation, implementation, and control. United States: McGraw-Hill.
L; and Jones, Gereth, R. (2013, 2010, & 2008). Strategic Management: An Integrated Approach, (Tenth, Ed). Mason, OH. South-Western Cengage learning.
G.G. Dess, G.T. Lumpkin, M.L. Taylor, A.A. Thompson, and A.J. Strickland III, Strategic Management (Boston, McGraw Hill, 2004) pp. 141-148.
I feel as though great food at a reasonable price along with timely service constitutes value. Price is always a factor to a customer, but they must also realize that quality food and service has a price. We currently have over 260 locations in 44 states and plan to open many new locations throughout 2007. Our
Pearce, J. A., II, Robinson, R. B. (2011). Strategic management: Formulation, implementation, and control (12th ed.). Boston, MA: McGraw-Hill/Irwin
Nevertheless, the majority of customers are very satisfied with the amount of serving along with the quality of their meal as well as the price paid. The strategy of being a low priced high value added has seen problems due to lack of customers which is affecting the bottom line drastically. This inevitable circumstance has put a hold on operations and started an investigation upon various neighboring competitors and their own strategies.
The price ceiling is the maximum price a seller is allowed to charge for a product or service. An impact on society includes when the prices are so high of a product, that no one can buy it. A price floor is the lowest legal price a product or service can be sold at. When market price is at its lowest, it may still be too high for consumers to purchase products. Governments can intervene for any purpose, and they are the ones who set these price controls.
Hitt, M., Ireland, R., Hoskisson, R. (2013) Strategic Management: Competitiveness & Globalisation, 10th edition, Cengage Learning
In order to achieve these strategies company undertakes a 5 P’s integrated approach to people, products, place, price and promotion. Company relies on its ability to continue to innovate and reinvesting in the restaurants to develop them according to system plans for world-wide growth, being consistent in providing excellent customer service and clean and friendly environment which enriches customers experience and create an overall difference that balances profitability with value.
Based on these 6 factors in setting a price: selecting the pricing objective, determining demand, estimating costs, analyzing competitors costs, prices and offers, selecting a pricing method and selecting the final price, Singapore GP Pte Ltd employed 2 different pricing strategies. They are
‘Strategic Management’ is a very complex term as many eminent researchers and scholars have had different views and conclusions on strategy. According to White (2004), “Strategic Management involves both systematically developing an idea together with its implications and testing the empirical validity & usefulness of that idea against the real world.” Thus strategy is not only about planning for future but also about confirming the validity of the hypothesis considered and implementing it successfully. Strategy formation may take various forms such as implicit, explicit or emergent. Implicit strategy is a strategy formed by intuitions of an individual. As per implicit strategists, strategic management is about reading the environment
Hitt, Michael, Hoskinsson, Robert, Ireland, D. ( 2011) Strategic Management: Competitiveness & Globalization: Concepts ( 10 ed.) Cengage Learning.
a) In a perfect competitive market, the sole determinant of pricing is the market demand and the supply curves. A demand curve refers to the total amount that consumers will pay for their products. The supply curve is the total amount that the producers can actually make to supply to the company at the price they can afford or are willing to pay. Another factor in a perfect competitive market structure is the equilibrium price which is basically when the supply of the market meets the market demand of the consumers. Anther unique feature of a perfect competition market is that it is a price taker. In essence, this means that the company doesn’t have any influence on the price. Again, this can only be caused through a market that has a large number of firms with identical products. (Samuelson and Marks, 2010).
A strategy, according to Robbins and Barnwell (2002, p. 139) is “the adoption of courses of action and the allocation of resources necessary to achieve the organisation’s goals”.
Hill, Charles W. L. and Gareth R. Jones. Strategic Management: An Integrated Approach. Mason, OH: South-Western Cengage Learning.