McDonalds Price Strategy
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McDonalds is famous for offering new products for a limited time. Often times these end up coming back as a full time product, for example the McRib. It is important to keep the standard when introducing products to McDonalds customer base. This helps customers believe in McDonalds and trust in their new products. As a pricing strategy McDonalds should stick with their limited offers, a value menu option, and for the rest of the product line McDonalds should look at the break-even analysis and find their break-even point in order to price the rest of their McDog line.
The break-even analysis is used to evaluate if the new product will be able to bring in enough revenue in order to cover costs of the new product. (William D. Perreault, 2011) Since the line is just being introduced to the public it is important that the product is priced where consumers will come in and taste the new line. If these are offered as a limited item and are successful, McDonalds will have a chance to “pull” the product and bring it back to the public as an official item for McDonalds and increase their price slightly now that it is an official product. By having the break-even point price already found McDonalds will be able to easily raise their prices enough to make profit but still keep their consumers happy.
Bibliography
William D. Perreault, P. J. (2011). Basic Marketing. A Marketing Strategy Planning Approach, 18 Edition. Chapter 18.