The price strategies of Blanchard café
by Mindan, Yanni, Syeda, and Jiayi
How many times have you been to Blanchard Café this semester? Have you ever felt frustrated that your meals kept exceeding the meal plan dollars—$7.25? Have you ever thought about the sales strategies of Blanchard café?
In fact, foods and beverages at Blanchard are very well calculated. The items at Blanchard, except for the special and classic salads which are exactly priced at $7.25, can be grouped basically into the following categories: soup($1.99), snacks (mostly $1.09 with some $1.29), dishes ($3.25 to $4.25), fruit ($0.65), burgers ($2.65 to 5.75), pizza (mostly $2.5 with some $3.5), ice cream (starting at $0.5), hot drinks (small coffee at $1.99, small tea at $1.65, coco at $0.65), regular salad ($4.25), cold drinks and snacks (yogurt $1.75, fruit $2.25, beverages ranging from $1.25 to 3.99).
In most cases, if one wants to order her meal among the various above-mentioned options, she may choose one item from group A (burgers, salad, pizza, dishes), one from group B (soup, fruit, cold food), one from group C (coffee, coco, drinks), and perhaps additional one from group D (snacks, ice cream). Now let’s do a brief analysis of the prices of items from each group. For group A, the items’ prices vary from $2.65 to $5.75, but most of them are priced at between $4.75 and $5.25. Hence, the price average is around $5. For group B, the prices vary from $0.65 to $2.25. However, based on my observation, most people won’t choose the item that costs$2.25. Instead, they would like to have a soup or one to two fruits, so the average price goes around $1.5 to $1.99. According to all the information above, if one chooses two items, each of $1.5, from group A and B, subtracting the costs from $7.25, she would only have $0.75 left! Now one can only choose coco from group C. It is worth noting that there is not a single item that is priced at exactly $0.75 in Blanchard Café and the cheapest one still costs $0.65 with the exception of a small bag of frozen carrot. It then follows naturally that one would either waste $0.1 of her meal plan or have to pay for the extra. Assume that there are 300 students on average who waste $0.1 in Blanchard Café per day, it will generate a considerable profit of $6000 for the college per year.
If one choose her daily meal following the exact pattern of the one mentioned above, the maximum price of $7.25 may be reasonable. Bearing this limit in mind, one can enjoy a very simple meal with a main dish, a soup or some fruit, and a drink. However, if different individuals’ preference are taken into consideration, then this proposed pattern will no longer hold. For the main dishes, the preference’s effect on prices is almost insignificant. However, for most students, a coffee is usually preferred over a coco for drinks, especially during the cold seasons. As for Massachusetts, cold weather lasts much longer than warm weather during a school year. If one adds a coffee and a main dish to her meal, then the price will go up to $6.5, leaving only $0.75 to spare. But since no item costs exactly $1 at Blanchard, there are only two choices available. One could get a fruit for $0.65 and waste $0.1 (Case 1), or she could get a snack for $1.09 and pay extra $0.44 (Case 2). In either way, you are indeed worse off.
From the perspective of profit maximization, the price ceiling of the mean plan for Blanchard Café is better to be $7.5 than $7.25. As mentioned above, if a student chooses a coffee and a main dish as her meal, then she will have additional unused $0.5 left. She might then decide to buy a fruit and pay the extra $0.15. In addition, she could choose pay for the cheapest carrot for $0.3, in which case she would lose $0.25. In case 2, one can have a main dish and a coffee with $1.01 left. She may go on to get a snack and pay extra $0.08 instead of wasting $0.46, which would happens if she buy a fruit. Thus, Blanchard’s profit is increased. Furthermore, if the price limit is raised to $7.6, then students can easily purchase foods with total costs of exactly $7.6. As a consequence, Blanchard’s profits will not be maximized.
It’s very interesting to analyze these price strategies. All in all, since profit is the primary concern for business, it is not surprising that Blanchard Café would have set such a price limit for student’s meal plan.
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