analyst Allan Hickok of the USD 0.55 come-on. “It looks almost desperate,” says Piper Jaffray, Inc. Predictably, “Hamburger Wednesday” sent investors on a Big Mac attack, slicing 9 per cent off McDonald’s share price in three days and dragging rival fast-food issues down with it. Apparently they took no notice of the fallout when Phillip Morris announced deep cuts on “Marlboro Friday”, or of “Grape Nuts Monday”, when the Post unit of Kraft Foods kicked off a cereal price war. Well, McDonald’s executives should have realized that there is, in fact, a better way. What better way to put some sizzle in the top line than a bold pocketbook appeal? After all, declining same-store sales in the US were the chain’s most glaring weakness. I’ll take whatever I can get.”įor McDonald’s top management, this pricing strategy made perfect sense. “Cool,” said Reyes, “Coupons, specials, sales. So Reyes perked up when he heard that McDonald’s had announced “an unprecedented value offering”–a USD 0.55 Big Mac that the company boasted was bad news for their competition. Never mind that Chicago is McDonald’s world headquarters-he splits his fast food patronage between McDonald’s and its arch-rival, Burger King, and counts every pennyworth of beef when deciding where to eat. More than ever they find they have to kowtow to the price demands of ordinary folks like Alonso Reyes, a 19-year-old from Chicago who works at a local car dealership. Back home in America, the executives that run this vast empire are not feeling very lordly. With 21,000 restaurants in 101 countries, it is everywhere–which is why the global economy is sometimes called McWorld. Explain the meaning of pricing from the perspective of the buyer, seller, and society.After reading this section, students should be able to …
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