Happy Hour : A Concept Of Encouraging Revenue Generation

1796 WordsSep 20, 20158 Pages
Happy hour is a concept of encouraging revenue generation between late afternoon and early evening hours times of the day when business is likely to be slow where in special rates for drinks and other items on the menu are offered. The goal is to increase profit using incremental pricing strategy using contribution to profit as the criteria. The price is reduced based on the demand The condition is such that the profit will increase if the restaurant gets happy hours customer other than who drink during normal hours and the increased customer base contributes more revenue. With the reduced price during happy hour, faraway consumers are willing to come to the local restaurant to take advantage of the reduced price. Any time with the increase in consumers demand the overall demand becomes more elastic to changes in price. The increase in elasticity causes the equilibrium price to be lower high demand. Customer who drinking and dine during normal hour will continue at a given location, otherwise they pay more to shop from a competitor farther away. Local restaurant has some local market power at a given location because local consumer have to pay more shop from a competitor farther away, but willing to pay a higher price for the convenience of local shopping. b. The price Company X charges for its ink cartridges is nearly as much as it charges for a printer. Each and every printer needs an ink cartridge which is a consumable, so the printer and ink cartridge are

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