"The price paid would be the same," said Braylon.
"I know it seems that way, but I still think it's very different," replied Lynette.
Braylon, the kitchen manager at the Kingsford Steakhouse, was talking to Lynette, the restaurant's owner. They were discussing the special introductory pricing being developed for a new menu item that would soon be placed on their menu.
They were both excited about their chefs new creation (a beef filet and lamb chop combination served with a rosemary reduction sauce) and they had agreed it would be priced at $39.95. That was a full five dollars more than their 20-ounce veal chop, the next most expensive item on the Kingsford's menu. They had decided to implement an introductory pricing strategy for the new item to encourage their regular clientele to give it a try.
With its downtown location, USDA Prime beef steaks, and extensive wine list, the Kingsford was a very popular spot for business lunches. At dinner time, it attracted fine food enthusiasts from all around the immediate area.
"Look," continued Braylon, "with my idea, we put 50 percent off coupons on our Web site. For the new item only. That way, the average selling price is essentially $15.00. With your "buy one/get the second at no charge," it's still 50 percent off. It's the same."
"But my approach obscures the price reduction better than yours, so I guess I'm not convinced it is the same. Or that our typical guest is the type that clips coupons," said Lynette.
"I don't know about that," replied Braylon. "Remember that everybody likes a bargain."
RM Considerations
1. Do you think the guests who would be attracted to Braylon's pricing strategy are the same type of guests as those that would be attracted to Lynette's pricing strategy? Why?
2. Do you agree with Braylon that all foodservice guests seek bargains when dining out?
3. Can the distribution method RMs use to advertise a specific price affect the profile of guests who respond to it? Do you see similarities between price distribution strategies in the foodservice industry and the various distribution channels managed by lodging industry RMs?