Apply What You Have Learned

Dominic Carbonne owns Hungry Henry's pizza, a fourunit chain of takeout pizza shops in a city of 60,000 people (with an additional 25,000 college students attending the local state university). Recently, a new chain of pizza restaurants has opened in town. The products sold by this new chain have lesser quality and use lesser quantity of ingredients (cheese, meat, fruit, and vegetable toppings) and are also priced 25 percent less than Hungry Henry's equivalentsize pizza.

Dominic has seen his business decline somewhat since the new chain opened. This is especially true with the college students.

Questions

1. How would you evaluate the new competitor's pricing strategy?
2. What steps would you advise Dominic to take to counter this competitor?
3. Describe three specific strategies restaurants can use to communicate "quality, rather than low price" to their potential customers.