Pricing Strategies in Fast Food Chains
4. What general pricing approaches have the hamburger chains in Japan pursued?
Different hamburger chains in Japan pursued slightly different pricing approaches nowadays. However, there used to be a similar pricing approach among the hamburger chains in Japan. Almost a decade ago, hamburger chains in Japan competed for the lowest price at which they can still afford to sell their burgers and earn profits. We could classify such an approach under the good-value pricing where the hamburger companies tried to push the price to be as low as possible so that they could have the edge on the fast-food business. Burger King back then did not cut prices and as a result it suffered and was forced to pull out of Japan after losing a price war with McDonald’s and other fast-food chains.
Nowadays, the economy is different. It shows a positive sign of growth. Thus, the Japanese are now more willing to spend money for better quality products including hamburgers. This situation allows more freedom for different hamburger chains to set their own pricing approaches. Burger King for example, has decided to re-enter the Japanese market with a pricing approach that leans more towards value-added pricing. It realizes that its rivals such as McDonald’s, MOS Burger, and Lotteria are currently selling their hamburgers at prices mostly lower that Burger King. However, Burger King’s hamburgers are more satisfying than others and they are the only hamburgers whose beef patties are cooked by flame broiler. Burger King hopes to convince the customers that the hamburgers are worth it, even though they are more expensive than other burgers.
McDonald’s seems to keep its good-value pricing although it has raised prices a few years ago to boost profits. The company seems to be doing well with its current pricing approach as it currently has approximately 1,200 outlets, most of which operate 24 hours. However, McDonald’s is expected to face a tough competition from Burger King as the spending
Different hamburger chains in Japan pursued slightly different pricing approaches nowadays. However, there used to be a similar pricing approach among the hamburger chains in Japan. Almost a decade ago, hamburger chains in Japan competed for the lowest price at which they can still afford to sell their burgers and earn profits. We could classify such an approach under the good-value pricing where the hamburger companies tried to push the price to be as low as possible so that they could have the edge on the fast-food business. Burger King back then did not cut prices and as a result it suffered and was forced to pull out of Japan after losing a price war with McDonald’s and other fast-food chains.
Nowadays, the economy is different. It shows a positive sign of growth. Thus, the Japanese are now more willing to spend money for better quality products including hamburgers. This situation allows more freedom for different hamburger chains to set their own pricing approaches. Burger King for example, has decided to re-enter the Japanese market with a pricing approach that leans more towards value-added pricing. It realizes that its rivals such as McDonald’s, MOS Burger, and Lotteria are currently selling their hamburgers at prices mostly lower that Burger King. However, Burger King’s hamburgers are more satisfying than others and they are the only hamburgers whose beef patties are cooked by flame broiler. Burger King hopes to convince the customers that the hamburgers are worth it, even though they are more expensive than other burgers.
McDonald’s seems to keep its good-value pricing although it has raised prices a few years ago to boost profits. The company seems to be doing well with its current pricing approach as it currently has approximately 1,200 outlets, most of which operate 24 hours. However, McDonald’s is expected to face a tough competition from Burger King as the spending