Teachers' blog


【Wanting a Bigger Piece】



(Contributed by Yuka)

Wanting a Bigger Piece


A popular Michigan-based pizza chain is now becoming like a hungry lion.  It has become more aggressive in the pizza market by targeting the lunch crowd with their $5 meal, which includes four slices of deep-dish pepperoni pizza along with a 20-ounce drink.


They believe that this packaging will lure in more customers from the lunch market, as it would satisfy the customer’s needs. The restaurant chain realizes that their customers want a lunch meal that is worth the value they are paying for at a reasonable price, since money is scarce for many individuals. According to research conducted in the fast food industry, researchers found that the average amount of money people pay is about $6.50 at popular fast food restaurants.


The best concept that can be applied to this situation is cost-benefit analysis. A cost-benefit analysis is a decision making process in which you compare what you will sacrifice and gain by a specific action. The Michigan-based pizza chain believes that lowering the price to $5 instead of $6.50 will lead to a better benefit in the long run, because more customers will come in and buy their products.


This will lead to bigger profits and bigger demand for their products. However, with the cost of lowering the price below the average amount of $6.50 for a combo meal, they won’t make as much money in the short run compared to other fast food restaurants.  However, in the long run, the chain’s strategy should allow the restaurant to pull ahead of their competition.

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