Pricing strategies in fast food chains

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Pricing strategies in fast food chains

Which one hits the mark? Choose the best one for your organization, and you'll manage your business more effectively. Supply chains encompass the end-to-end flow of information, products, and money.

For that reason, the way they are managed strongly affects an organization's competitiveness in such areas as product cost, working capital requirements, speed to market, and service perception, among others. In this context, the proper alignment of the supply chain with business strategy is essential to ensure a Pricing strategies in fast food chains level of business performance.

In Marshall Fisher introduced the revolutionary concept of supply chain segmentation in his famous article "What is the right supply chain for your product?

Kearney, 6 among others, developed several models regarding the formulation of supply chain strategy. Article Figures [Figure 1] The four main elements of supply chain strategy Enlarge this image [Figure 2] Factors in supply chain processes Enlarge this image [Figure 3] Supply chain roadmap: This is largely because they have not paid enough attention to the connections and combinations among key drivers throughout the value chain, nor to their alignment with an industry's competitive framework and with each organization's unique value proposal also called the "value proposition".

In order to address this shortcoming, I have conducted an analysis of the most widely recognized theories and case studies about supply chain strategy.

My analysis has identified a set of common patterns that reveal key drivers of supply chain strategy and explain how these can be aligned in a coherent strategy. Those findings are summarized in a strategy-formulation model called the "Supply Chain Roadmap," which provides: This article will describe each supply chain type and will outline the criteria for adopting them, thereby helping to answer one of the most frequently recurring questions among supply chain executives: Which supply chain strategy best fits my business?

The four elements of supply chain strategy To paraphrase Michael Porter, 7 while operational efficacy deals with achieving excellence in individual activities or functions, supply chain strategy defines the connection and combination of activities and functions throughout the value chain, in order to fulfill the business value proposal to customers in a marketplace.

Accordingly, an organization's supply chain strategy is shaped by the interrelation among four main elements, as shown in Figure 1: Although each of these elements includes multiple factors, only some of those factors are relevant drivers for the formulation of a supply chain strategy.

Within this framework are four main drivers affecting supply chain design, all of them interrelated: Demand variation, or demand profile, influences the stability and consistency of the manufacturing assets' workload, and consequently is a main driver of production efficiency and product cost.

Market mediation costs, as defined by Marshall Fisher, are costs associated with the imbalance of demand and supply.

Examples include product price markdowns to compensate for excess supply, and lost sales when demand exceeds supply. These costs, which reflect the unstable and fragile balance between lost sales and product obsolescence, arise from the consequences of the degree of demand predictability.

Product lifecycle, which is continually getting shorter in response to the speed of change in technology, fashion, and consumer product trends, affects the predictability of demand and market mediation costs.

Consequently, it pushes companies to increase the speed of product development and to continuously renew their product portfolios. Relevance of the cost of assets to total cost becomes critical in industrial sectors where business profits are highly correlated with the asset-utilization rate.

Companies fitting this profile must assure high utilization rates, often to the detriment of working capital and service levels. In industries where the relevance of the cost of assets is low, companies may choose strategies that focus on responsiveness.

In these cases, the asset-utilization rate falls between high and low, but responsiveness to unexpected demand is high, increasing customer satisfaction and reducing market mediation cost. The second element, the unique value proposal, requires a clear understanding of the organization's competitive positioning in terms of its supply chain.

A good approach to this is the concept of "order qualifiers" and "order winners" described in by Alex and Terry Hill. Recognizing the main "order winners" in terms of product features and service in a company's value proposal allows the enterprise to shape the connection and combination of the key drivers that must be incorporated into supply chain processes in order to ensure the fulfillment of that value promise to customers.

Before discussing the fourth element—internal processes—it is important to explain the linkage and alignment between an organization's competitive positioning and its supply chain processes. The connection between these two areas is governed by the decision-making process and is driven by the supply chain's managerial focus.

This focus is the most important factor in ensuring coherence between supply chain execution and a business's unique value proposal.

Yet it also can be an area where organizations are more likely to fail.

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Such failures mainly result from a standard managerial approach that emphasizes efficiency-oriented performance indicators regardless of the competitive positioning defined by the organization. This approach encourages companies to focus on seeking local efficiencies that may conflict with their value proposal to customers, thus creating misalignment between the supply chain and business strategy.

The fourth element, internal processes, provides an orientation that ensures a proper connection and combination within the supply chain activities that fall under the categories of source, make, and deliver.

Among the many factors encompassed by this element, the most important are asset utilization and the location of the decoupling point. The decoupling point is the process in the value chain where a product takes on unique characteristics or specifications for a specific customer or group of customers.

There is a high degree of interdependence between these two factors, and they in turn govern other factors:Subscribe now and save, give a gift subscription or get help with an existing subscription. More significant, however, is how the phenomenon of rising costs can, over time, produce strategically relevant shifts in a company’s cost structure and cost competitiveness.

particularly true for fast food chains, many of which have the opportunity to straddle multiple McDonalds Pricing Strategy Value Pricing McDonalds came with the concept of value pricing for Indian consumers where in it came out with various combos in form of Happy Meals comprising of small burgers.

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Pricing strategies in fast food chains

Wendy’s pricing strategy is similar to those of firms like McDonald’s and Burger King. This component of the marketing mix identifies the company’s strategies for setting its prices.

Wendy’s applies the following pricing strategies: Market-oriented pricing strategy; Product bundle pricing strategy; Wendy’s main pricing strategy is market-oriented. Justin Sullivan / Getty Images The mission statement of McDonald's fast food restaurants is a common mission for every restaurant, but the McDonald's Values reflect the McDonald's experience.

Jul 08,  · Major fast-food chains working to regain momentum had lost their focus with too many menu expansions. Adopting a QSR-Plus mindset, in which a .

Fast Food Marketing Strategies | Your Business