Shall We Put Up Our Price
Case 4
Shall we put up our price?
Competition, price and revenue
1. Why might a restaurant charge very high prices for wine and bottled water and yet quite reasonable prices for food?
As it is known price is one of the most important factors in competition. Thus price strategy on products/services should be carefully chosen in order to use it as one of the main competitive advantages and take the upper hand on competitors. In case of restaurants, the primary product is cuisine and special dishes that they offer visitors, wine and bottled water are secondary products. Because of that, restaurants try to set reasonable prices on their main products in order to attract customers, and they place relatively higher prices on beverages, as they are like additional attribute or value, for which customers have to pay extra money.Though it should be remarked that very few of the customers get away without beverages, and in spite of the price they mostly order some drinks with the......
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