Taco Bell: Pricing for Value Offering quality food at a great price is nothing new to Taco Bell. Founded in 1962, Taco Bell pion
eered value-based pricing with its three-tiered menu, offering food choices for 59, 79, and 99 cents. Taco Bell's director of marketing discusses how value plays a key role in the firm's pricing strategies. Of the four Ps—product, price, place and promotion—price is the most challenging to manage, partly because it is often the least understood. Historically, managers have treated price as an afterthought to their marketing strategies, matching competitors' prices or, worse yet, by adding up their costs and tacking on a desired profit to set the sales price. Prices were rarely changed except in response to radical shifts in market conditions. Even today, pricing decisions are often relegated to standard rules of thumb that fail to reflect our current understanding of the role of price in the marketing mix. Click the button to watch the video. Then, answer the questions that follow. Play Video One reason Taco Bell raised its prices was the result of an increase in ___________.a. profits.b. sales to loyal customers.c. costs.d. competitors' prices.e. market share.
The cost of production of a particular commodity is a factor that determines the price of the commodity. An increase in production cost will lead to an increase in the price of the commodity. If the cost of production decreases, the price of the commodity will also decrease. This is to ensure that the company makes sufficient profit from the production of the commodity.
