McDonald's $10 Burger - Week 9 EOC

    On page 291 of MKTG by Lamb Hair McDaniel, there is a discussion of pricing at McDonalds. It states, "There would probably be little demand for a menu item that was out of the price/value range established by other items in McDonald's product line. For example, a $10 burger would be well out of the price range that McDonald's customers expect for that product class." I think that with value-pricing, product modification and repositioning of McDonald's burger, the making a $10 burger would not seem exorbitant for that product class.
    If McDonald's took their burger and applied, "product modification which changes one or more of a product's characteristics such as quality modification... increasing quality can help the firm compete with rival firms. Increasing quality can also result in increased brand loyalty, greater ability to raise prices..."(MKTG, Lamb Hair McDaniel, pg 134, chapt. 9) They could produce a burger that communicated "Value-based pricing, also called value pricing, a pricing strategy that has grown out of the quality movement. Instead of figuring prices based on costs or competitors' prices, it starts with the customer, considers the competition, and then determines the appropriate price. ...The basic assumption is that the firm is customer driven, seeking to understand the attributes customers want in the goods and services they buy and the value of that bundle of attributes to customers...Customers determine the value of a product (not just its price) relative to the value of alternatives. Value-based pricing stresses to customers that they are getting a good value for their money. (MKTG, Lamb Hair McDaniel, Pgs 283 & 290 chapt. 18)
    By modifying their burgers McDonald's could give customers the things they would value in a burger such as a healthier, bigger, tastier burger that they could still get with the fast service and convenience that they have come to expect from McDonald's. This product modification can produce "repositioning which involves changing consumers' perceptions of a brand in relation to competing brands." (MKTG, Lamb Hair McDaniel, pg 111, chapt. 7) This would give McDonald's customers the feeling that, even though they are paying $10 for a McDonald's burger, they are getting their money's worth.