1. Why did Taco Bell decide to employ this strategy?
2. Do you think it is a wise strategy for them to use? Explain.
3. Will there be a negative consequence to implementing this strategy? Explain.
4. Which Product Mix Pricing strategy is Taco Bell using?
It was recently announced that Taco Bell is adding dollar menu items to their line of food products. This was being done in order to match competitors in the fast food industry. Taco Bell has come up with a mid-afternoon campaign, titled "Happier Hour", in which patrons who visit the restaurant chain between the hours of two and five in the afternoon have access to a dollar value menu. This is not a new strategy, however. McDonalds, Wendy's and Burger King have employed this strategy for a number of years and now Taco Bell is attempting to integrate this approach into their marketing strategy. Taco Bell is using what is known in the industry as the "Bar Bell Strategy" where people come into the establishment to purchase a particular item, and then once in the establishment, the staff (or the atmosphere itself) will try to get the consumer to change their minds and order a more expensive (better margined) food item(s) at the restaurant.
This strategy isn't just happening at fast food places, however. By offering meal courses at a very competitive price point, the food industry in general (sit down restaurants) is incorporating a strategy in which their consumers are getting better "bang for their buck" as well.
One major industry concern is the potential damage the deep discounting could give to the brand. Only time will tell what impact (if any) the deep discounting pricing could have on any of these brands.