Mr.Majid is thinking to start a new business venture which will be offering different types of pizzas. Initially he will offer one kind of pizza i.e. Chicken tikka. He is planning to establish his restaurant in a locality near to UCP. Area around UCP is already filled with different types of students’ café which are offering variety of fast food items. As students are mostly price conscious therefore there are stiff competition in the market. Although price is a crucial factor but students of UCP also weighted quality as important factor in deciding the café to dine in. Mr.Majid has conducted a market survey which have suggested two prices and expected demand against each price. Price 1 (Rs.) 700 Quantity 1 550 Price 2 (Rs.) 1500 Quantity 2 120 Requirements Determine elasticity of demand of the product based on prices and quantity mentioned. Determine the optimum price and quantity. Also calculated maximum profit company can earn. Based on the model above what would be the maximum price of the product. Based on calculations and current market situation suggest which pricing strategy company should use.
Mr.Majid is thinking to start a new business venture which will be offering different types of pizzas. Initially he will offer one kind of pizza i.e. Chicken tikka. He is planning to establish his restaurant in a locality near to UCP. Area around UCP is already filled with different types of students’ café which are offering variety of fast food items. As students are mostly price conscious therefore there are stiff competition in the market. Although price is a crucial factor but students of UCP also weighted quality as important factor in deciding the café to dine in. Mr.Majid has conducted a market survey which have suggested two prices and expected demand against each price.
|
Price 1 (Rs.) |
700 |
|
Quantity 1 |
550 |
|
Price 2 (Rs.) |
1500 |
|
Quantity 2 |
120 |
Requirements
Determine
Determine the optimum price and quantity. Also calculated maximum profit company can earn.
Based on the model above what would be the maximum price of the product.
Based on calculations and current market situation suggest which pricing strategy company should use.
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