With prices fairly consistent, how are companies competing efficiently? My recommendation would be to offer a diverse variety of products at moderate prices. Promotional offers and value pricing can be an efficient way to generate profit. McDonald’s Dollar Menu is a highly efficient price strategy to retain sales during declining economic times. “While dollar menus have driven sales, price wars have affected profits. Companies may offer meal packages or “super-size” options to increase the customer check and provide additional consumer value” (Hoover’s, 2009). The dollar menu is a fairly consistent strategy amongst McDonald’s competitors but the selection of product is limited.
Another strategy that McDonald’s has implemented is penetration pricing. They have made a distinct effort to introduce a new product line to consumers while offering the product at a low cost. For example, when McDonald’s partnered with Green Mountain Coffee, they ran a promotion where coffee was free from the hours of 4 AM – 7 AM. This generated awareness for the new product while bringing more profit to the organization.
McConnell, C. R., Brue, S.L., & Flynn, S.M. (2009). Economics: Principles, problems, and policies (18th ed.). New York: McGraw Hill/Irwin.
McDonald’s – Fact