Pricing Strategy

Fast Food Restaurant Industry

Project Documentation

August, 2008
Juan Andrade
Lucia Cerrilla
Ricardo Haneine
Kenichi Ishizaki
Alejandro Martinez
Jorge Milke
Alfredo Tsutsumi
Developed a pricing recommendation for a master franchiser of
multiple fast food chains facing a sudden rise in costs

Diagnostic

Client Situation Approaches/Tools

• Client operated as the master franchiser for multiple
fast food chains (owned and franchised restaurants)
• Fast food industry faced a sudden and generalized
increase in costs of core inputs and of basic raw
materials
• Client requested a review of its pricing strategy with
the objective of minimizing the impact of rising costs in
its operation margins
• Three simultaneous frameworks were developed
covering costs, price elasticities of demand and market
segmentation
• A detailed cost baseline was developed in order to
measure the impact of costs in margins
• Price elasticity of demand analysis was conducted to
measure sensitivity of demand and generate scenarios
• A market segmentation proposition was generated to
obtain visibility of the competitive landscape and the
space of manoeuvre to alter prices

Results
• An immediate price increase recommendation for the most important products of the fast food companies was offered
• Client gained detailed visibility of the impact of costs of specific elements in the operating margins of its companies
• A unified pricing adjustment framework and model based on price elasticity was delivered to the Client
• A market segmentation proposal for each fast food chain was developed, including the relative position of competitor
products and the space of maneuver to alter prices given those of the competition

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A strategy of conducting three simultaneous work streams was
essential for developing recommendation
Lessons Learned
Client
• Client did not have complete
visibility of the impact of inputs in
its margins
• Structured pricing models and
pricing evaluation processes
were not in place
• Client did not have a clear value
proposition and market
segmentation of products (and of
competitors)
• Client had historically adopted a
rudimentary (general
adjustments for the whole
portfolio) and follower role in
price adjustments
Client Industry
• Highly competitive industry with
few players facing similar
sudden increases in prices of
core inputs
• According to cost structure and
market strategy, market players
are willing to afford pressure in
costs to gain market share
• Price sensitivity particularly
high for low-end products and
offered in low-income locations
• Price adjustments in the
industry had historically
adopted a leader-follower
model
Consulting Process
• Planning and developing an in-
depth client information request
process is essential before
initiating the analysis, and
moreover when there is a tight
timeline
• Basic statistic and econometric
modeling may serve as a rapid
tool to evaluate pricing
strategies (measuring elasticity
with real numbers)
• Final results validation process
with client is crucial before final
presentations
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Pricing Strategy

 Introduction and Approach Overview

 Pizza Chain Business Unit

 Hamburger Chain Business Unit

 Conclusions and Next Steps

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A master franchiser of fast food chains experienced a sudden
increase in input costs and wanted to review its pricing strategy
Project Objective and Agenda
Project Objective
• For the master franchiser of fast
food chains make an immediate
decision regarding potential
changes in prices for the products
of two business units.
Introduction and Approach Overview
Agenda
• Client Current Situation
– Revenue Measurement
– Cost Structure Assessment
– Variation of Input Costs Measurement
• Current and Proposed Situation for Business Units:
Pizzas and Hamburgers
– Determine Key Products
– Calculate Price Elasticities of Demand
– Evaluate Product Segmentation / Competition
– Generate Proposed Scenarios
– Present Implications / Requirements
• Final discussions and agreement on action plan
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 Introduction and Approach Overview

The project had to comply with an extremely tight timeline

requiring simultaneous work-streams in a period of 10 days

Project Timeline

Pizza Chain Business Unit

Hamburger Chain Business Unit
Product Revenue Final Working
Price Elasticity
Inflation of Inputs Segmentation Impact Session and
of Demand
Analysis Matrix and Scenarios and Implementation
Analysis
Competition Simulations Proposal

Day 1 Day 10

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 Introduction and Approach Overview

Changes in tax legislation and a sudden increase in cost of

inputs had a negative impact in gross profit of business units

Business Units Gross Profit

Pizza Chain Business Unit Hamburger Chain Business Unit

67.3% 4.0% 67.9% 2.9%

0.4% 0.3% 63.4% 2.6%
2.1% 60.3%

Acum. Tax Impact Acum. Acum. Estimated Acum. Tax Impact Acum. Acum. Estimated
Gross Margin Margin Gross Gross Margin Margin Gross
Profit Growth Reduction Profit Profit Growth Reduction Profit

Jan – Jun Jan – Aug Jan – Jun Jun – Aug Aug Jan – Jun Jan – Aug Jan – Jun Jun – Aug Aug
2008 2008 2008 2008 2008 2008 2008 2008 2008 2008

Source: Income Statements January 2007 to June 2008; Supply Chain July 2008 Inflation Information; A.T, Kearney analysis
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Pricing Strategy

 Introduction and Approach Overview

 Pizza Chain Business Unit

 Hamburger Chain Business Unit

 Conclusions and Next Steps

A.T. Kearney 05/08.08/ 42-5241-02 8

 Pizza Chain Business Unit

An initial diagnostic was executed regarding the impact of the

increase of inputs costs on the Supply Business Unit

Supply Business Unit Sales(1)

($MXN million)
13.1% -1.7% -1.4% 8.7% -6.6%

33.6 25.7
50.8 6.6 5.4 445.8

388.3 Operating
117.3 Margin
Operating (26.3%)
Margin 118.4
(30.7%)

Cost of
Cost of Inputs
Inputs 328.5 (73.7%)
(69.3%) 269.9

Sales to Pizza Cost Increase Exchange Rate Supply Volume Effect Combined Sales to Pizza
Chain (Acum. of Inputs Effect Effect Company Effect Chain (Acum.
Jan-Jun 2007) Margin Effect Jan-Jun 2008)

Notes: (1) Client had a business unit that supplied basic inputs to the Pizza Chain and Hamburger Chain Business Units
Source: Client Supply Business Unit Sales Information; A.T. Kearney analysis
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 Pizza Chain Business Unit

Additional effects were included as part of the initial diagnostic

in order to better understand the impact of inflation of inputs

Impact of Input Costs in Product Costs

($MXN Constant Prices)
3.5 0.1 2.3
29.6 0.7 0.7 0.9 30.5 30.7
28.5

Initial Pizza Cost of Exchange Supply End of Year Cost of Exchange Supply Mid Year Forecast
Cost Inputs Rate Effect Business Pizza Cost Inputs Rate Effect Business Pizza Cost Pizza Cost
Effect Unit Effect Effect Unit Effect
Jan Jan – Dec Jan – Dec Jan – Dec Dec Jan – Jun Jan – Jun Jan – Jun Jun Dec
2007 2007 2007 2007 2007 2008 2008 2008 2008 2008

Source: Client Supply Business Unit Sales Information; A.T. Kearney analysis
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 Pizza Chain Business Unit

For the Pizza Chain the analysis focused on the products that
represented 83% of revenues and 85% of the operating margin

80/20 Product Matrix

130
100
Large
Medium Pizza • Selected products
Pizza
(three) corresponded to
Monthly Sales by Product

83% of the revenue and

85% of the operating
($MXN million)(1)

Extra margin
Soda 600 ml Large
Pizza
10 • Prices for all
Cinnamon
Bread socioeconomic
Cheese segments (four) were
Fries Bread Double Extra
Large Pizza
considered(2)
Chicken Personal Pizza
Wings
Glazed Pizza 8" • Analysis was focused on
Cinnamon direct sales(3) (which
Bread Chicken Nuggets
1 represented 50% of
sales)
0 40 90 140 80
Unitary Margin
($MXN)

Notes: (1) Logarithmic Axis

(2) Prices varied according to socioeconomic characteristics of households near pizza store locations (special, base, high, and premium)
(3) Client direct sales (through-phone-sales) of large, medium and extra large pizza accounted for 50% of total sales
Source: Client Pizza Chain Business Unit Financial Information; A.T. Kearney analysis
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 Pizza Chain Business Unit

Price elasticity of demand was estimated using household

income, media expenditure and other control variables

Estimation of Price-Elasticity of Demand

Q = P + I + E
Quantity Price Average Other Control
Demanded Household Variables
Income
• Quantity Demanded • Real Unit Price • Average Household • Publicity Index(2)
Income(1):
- Monthly sales volume of - Estimated as the total - Normalized spend in
large, medium and revenue of product - Household income by publicity
extra large pizzas for divided by volume socioeconomic level
the last 5 years (low, medium, high) • Number of Stores
- Adjusted to account
- By segment (low, the latest monthly - National Household - Monthly number of
base, high, premium) consumer price index Income and POS locations
level Expenditure Survey
- By ingredient (1 to 2 (INEGI-ENIGH)
ingredients and 3 to
9 ingredients)

Notes: (1) Estimated using annual household income by socioeconomic level and extrapolating by a monthly index of industrial activity
(2) Index constructed from the expenditure in national and regional/local publicity
Source: Client Monthly Sales, Price and Publicity Spend 2003-2008; Sigma Markets; Mexico Census Bureau (INEGI); A.T. Kearney analysis
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 Pizza Chain Business Unit

The price elasticity of demand analysis showed potential to

follow different pricing strategies to maximize revenues

Sales by Product and Price Elasticities of Demand

90
80 Increase
Large Pizza Prices in Elements to Consider for
(High)
Proportion to the Price Recommendations
Large Pizza Increments in
(Base) Input Costs
Annual Sales by Product

60 Cost Increase Comparison Change in Price

Medium Pizza with Mechanism
($MXN millions)(1,2,3)

(High) Competition

40 Reduce • Direct price

Prices Suggested change
Medium Pizza Price
Introduce (Base) change in price
Supplier Supplier • Price change Adjustment
Promotions based on Proposal
Extra Large Pizza elasticities using
20 (High) promotions

Extra Large Pizza Large Pizza

Large Pizza • Other
(Premium)
(Base) (Special) Medium Pizza
Medium Pizza
Extra Large Pizza (Special)
(Premium) Increase
Extra Large Pizza
(Special) (Premium) Prices
0
-5-6 -4 -3 -2 -1 0

Large Medium Extra Large

Price-Elasticity of Demand(4)
Notes: (1) Includes medium, large and extra large pizzas that were sold on a stand-alone basis (with no additional products)
(2) Parenthesis denotes the price of the pizza by store type (Special, Base, High, Premium)
(2) Sales by product captured from January 2008 to Jun 2008 (including VAT taxes)
(3) Quantity demanded sensitivity due to changes in price
Source: Monthly Sales by Product 2003 – 2008
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 Pizza Chain Business Unit

Competitor product offering and segmentation served as a final

check to evaluate potential price modifications

Product Segmentation Matrix

($MXN)(1)
Client(1) Competitor 1 Competitor 2 Competitor 3
(Pizza Delivery Chain) (Fast Food Chain) (Pizza Delivery Chain) (Pizza Delivery Boutique)
Product Price Product Price Product Price Product Price
Medium 3 to 9 2x1 medium
ingredients (menu $129 – $179 seafood (2 to 6 $140
Premium and buffet price) NA NA ingredients)
Products Large 3 to 9 2 x 1 large
ingredients (menu $170 – $229 seafood (2 to 6 $180
and buffet price) ingredients)
Medium 1 to 2 Family Bucket Cheese dough $199 Specialty Medium $155
ingredients (menu $105 – $139 (18 pieces) $199 Medium (1 to 2 & 1 to 6 ingredients
and buffet price) 3 to 9 ingredients)
Large 1 to 2 Family Bucket Cheese dough 1 2 x 1 large
Core ingredients (menu $139 – $189 (14 pieces) $160 to 2 & 3 to 9 $144 specialty 5 to 6 $180
Products and buffet price) ingredients) ingredients
Extra Large (menu $199 – $219 Family Bucket $120
and buffet price) (10 pieces)
Family Bucket
(8 pieces) $95
3-piece combo $45 Medium 1 to 2 & 3 $79 Regular Medium $115
to 9 ingredients 2X1
2-piece combo $35 Large 1 to 2 & 3 to $99 Large Medium $130
9 ingredients 2X1
Mega box $65
Value/Price NA
Products Chicken strips $45
Mini combo $29
Two pieces $29

Notes: (1) Menu price: price offered in 2x1 promotions, Buffet price: price offered for ordinary days
Source: Client Pizza Chain Business Unit Marketing Information; A.T. Kearney analysis
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 Pizza Chain Business Unit

Taking into consideration the previous analyses, the following

price adjustments were proposed

Price Adjustment Proposal

Immediate • Adjust prices in all products taking into account expected annual inflation for
adjustment for next year (approximately 3% considering the expected CPI index for the
inflation(1) following year)

• In the third quarter of the year, modify prices as a function of price-

Low Elasticity elasticities of demand and following an integral marketing strategy
Products
(Elasticity near or • Increase prices for products that fall into market segments in which
below 1) competition does not have a stronghold or the price gap between similar
products is not large

• Increase that number of promotions (i.e. 2x1 days) with brand alliances (i.e.
High Elasticity 2x1 coupons offered with allied brands and companies)
Products
(Elasticity greater • Attach low-end supplementary products to pizzas
than 1)
• Offer unique promotions for the lowest purchasing power store locations

Notes: (1) Client had already adjusted prices by 1.6%. So the true increase would be 1.4% and not actually 3%
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 Pizza Chain Business Unit

As a final step price adjustment proposals were expected to

have an estimated positive impact of 1% in operating margins

Gross Profit Impact

(%)

67.3% 4.0%
0.4% 0.3% 63.4% 1.0% 64.4%

• Assumption: A perfect inelastic

demand is assumed given that
the change in price is an
adjustment in response to
expected inflation
• Price adjustments: Uniform
increase in price for all
products preserves alignment
across product categories

Gross Profit Change in Operating Operating Estimated Change in Final Gross

Tax Margin Margin Gross Profit Price Profit
Legislation Increase Reduction Impact

Jan – Jun Jan Jan – Jun Jun – Aug Aug Sep – Dec End-of-Year
2007 2007 2008 2008 2008 2008 2008

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Pricing Strategy

 Introduction and Approach Overview

 Pizza Chain Business Unit

 Hamburger Chain Business Unit

 Conclusions and Next Steps

A.T. Kearney 05/08.08/ 42-5241-02 17

 Hamburger Chain Business Unit

Similarly to the Pizza Chain, an initial diagnostic was executed

regarding the impact of the increase of inputs costs

Supply Business Unit Sales(1)

($MXN Million)
22.1% -0.3% 4.1% 25.3% -23.3%

26.7 -24.6

4.4 117.3
23.3 -0.3 Operating
17.6 Margin
Operating 118.4 (13.0%)
Margin
(12.7%) 13.4

Cost of
Cost of 117.4 Inputs
Inputs (87.0%)
92.0
(87.3%)

Sales to Ham. Cost Increase Exchange Rate Supply Volume Effect Combined Sales to Ham.
Chain (Acum. of Inputs Effect Effect Company Effect Chain (Acum.
Jan-Jun 2007) Margin Effect Jan-Jun 2008)

Notes: (1) Client had a business unit that supplied basic inputs to the Pizza Chain and Hamburger Chain Business Units
Source: Client Supply Business Unit Sales Information; A.T. Kearney analysis
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 Hamburger Chain Business Unit

Additional effects were included as part of the initial diagnostic

in order to better understand the impact of inflation of inputs

Impact of Input Costs in Product Costs

($MXN Constant Prices)
16.5
1.0 -0.2 0.03 15.2
0.6 -0.03 0.1 14.5
13.8

Initial Cost of Exchange Supply End of Year Cost of Exchange Supply Mid Year Forecast
Hamb. Cost Inputs Rate Effect Business Hamb. Cost Inputs Rate Effect Business Hamb. Cost Hamb. Cost
Effect Unit Effect Effect Unit Effect
Jan Jan – Dec Jan – Dec Jan – Dec Dec Jan – Jun Jan – Jun Jan – Jun Jun Dec
2007 2007 2007 2007 2007 2008 2008 2008 2008 2008

Source: Client Supply Business Unit Sales Information; A.T. Kearney analysis
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 Hamburger Chain Business Unit

For the Hamburger Chain, price adjustments were focused on

products that represent 84% of revenue and operating margin

80/20 Product Matrix

60
120 HAMB./CH DOUBLE HAMB./CH
MEAL MEAL

50 KIDS TOY BIG

CHICKEN
ECO SUPREME MEAL
Sales by Product 2007

HAMB. MEAL
SPECIAL
ECO HAMB A MEAL
40 /CH-BACON
($MXN million)(1)

HAMB. /CH-
SUPREME KIDS HAMB./CH BACON MEAL
X 29 MEAL
MEDIUM Selected products
30 SIZE
ECO DOUBLE
CHICKEN FINGERS
(29) correspond to
CRISPY MEAL
HAMB. MEAL
BIG HAMB.
84% of revenue
LARGE
SIZE
MEGA
JR HAMB./CH
MEAL
MEAL and operating
FINGERS
20 CONE MEALS margin
SUPREME
2 X $49 JR. FINGERS
FINGERS GRILL MEAL
ECO CRISP
MEAL
SPECIAL CHEESE MEAL
STICKS JR. HAM. LARGE
10 CONO
MEAL $25 CHICKEN FRENCH SPECIAL B DOUBLE HAMB.
JR DOUBLE CAESAR FRIES MEAL /CH – BACON
DOBLE HAMB. MEAL

0
0 10 20 30 40 50 60
Unitary Margin
($MXN)
Notes: (1) Logarithmic Axis
Source: Client Hamburger Business Unit Financial Information; A.T. Kearney analysis
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 Hamburger Chain Business Unit

Price elasticity of demand was estimated using product prices,

household income and other control variables

Estimation of Price-Elasticity of Demand

Q = P + I + E
Quantity Price Average Other Control
Demanded Household Variables
Income
• Quantity Demanded • Real Unit Price • Average Household • Competence Index (2):
Income(1):
- Weekly sales volume of - Estimated as the total - Monthly prices for
meals, kids meals, and revenue of product - Household income by similar products from
most important divided by volume socioeconomic level main competitors
individual products for (low, medium, high)
2007 and 2008 - Adjusted to account • Number of Stores
the latest monthly - National Household
consumer price index Income and - Monthly number of
level Expenditure Survey POS locations
(INEGI-ENIGH)

Notes: (1) Estimated using annual household income by socioeconomic level and extrapolating by a monthly index of industrial activity
(2) Competence Index : Index constructed from monthly prices by similar products from their main competitors
Source: Client Weekly Sales; Main competitors pricing information; Sigma Markets; Mexico Census Bureau (INEGI); A.T. Kearney analysis
A.T. Kearney 05/08.08/ 42-5241-02 21
 Hamburger Chain Business Unit

The price elasticity of demand analysis showed low potential of

increasing prices for the Hamburger Chain

Sales by Product and Price Elasticities of Demand

70
50 HAM. CH MEAL Elements to Consider for
DOUBLE HAM./CH the Price Recommendations
MEAL

40
Annual Sales by Product

KIDS HAMB. Increase Cost Increase Comparison Change in Price

/CH MEAL
Prices with Mechanism
($MXN millions)(1)

BIG CHICKEN Competition

MEAL
30
ECO HAMB
/CH -BACON
• Direct price
ECO SUP.
SPECIAL A ECO SPICY change
MEAL CRISPY Suggested
HAMB HAMB. /CH- Price
MEAL BACON MEAL change in price • Price change
20 JR. FINGERS Adjustment
MEAL TEND. JR. FINGERS CHICKEN based on using
LARGE CRISP MEAL Supplier Supplier Proposal
SIZE MEAL
MEAL elasticities promotions
JR.
BIG HAMB. ECO HAMB./CH MEDIUM • Other
MEAL DOUBLE MEAL SIZE
10 HAMB.
DOUBLE CONE
FINGERS CONE LARGE
GRILL MEAL JR DOUBLE FRENCH
/CH HAMB. FRIES
HAMB. /CH MEAL
0
-8
-5 -4 -3 -2 -1 0
Core Premium Value/Price

Price-Elasticity of Demand(2)
Notes: (1) Sales by product captured from January 2008 to Jun 2008 (including VAT taxes)
(2) Quantity demanded sensitivity due to changes in price
Source: Weekly Sales by Product 2007 – 2008
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 Hamburger Chain Business Unit

Competitor product offering and segmentation served as a final

check to evaluate potential price modifications

Product Segmentation Matrix

($MXN)
Client Competitor 1 Competitor 2 Competitor 3
(Hamburger Chain) (Fast Food Chain) (Hamburger Chain) (Hamburger Chain)
Product Price Product Price Price Product Price
Double Hamb. Meal /Ch $ 68 Big Hamb. Meal $51 Spec. A Hamb. Meal $ 85
Premium Double quarter
Special A Meal $ 71 NA $51 Spec. B Hamb. Meal $ 87
Products pounder Meal
Special B Meal $ 71 Chicken Club Meal $ 80
Hamb. /Ch Meal $ 58 Family Bucket (18 pieces) $199 Quarter Pounder Meal $ 57 Hamb. Meal
Hamb. /Ch-Bacon Meal $ 63 Family Bucket (14 pieces) $ 160 Special Hamb. Meal $ 48 Super Hamb. /Ch
Jr. Hamb. /Ch Meal $ 46 Family Bucket (10 pieces) $ 120 Chicken Meal $ 48 Kinds Hamb. /Ch
Hamb. /Ch $ 42 Family Bucket (8 pieces) $ 95 Crispy Chicken Meal $ 48 Medium size
Classic Grill Chicken
Chicken Fingers Crispy Meal $ 54 Meal
$ 48 Large Size
Core Big Chicken Meal $ 66 Club Chicken Meal $ 48
Products Fingers Grill Meal $ 66 Super Chicken /Ch Meal $ 48
Medium/Large size $ 9-13 Hamb. /Ch Kids Meal $ 41
Jr. Fingers Meal $ 52 Large Size $6
Kids Hamb. /Ch Meal $ 52
Jr Chicken Fingers Meal $ 57
Jr Double Hamb. Meal $ 57
Eco Sup. Hamb. Meal $33 3-piece combo $45 Small Hamb. $ 10 Regular Medium 2X1 $115
Eco Hamb/ Ch-Bacon
$33 2-piece combo $35 Sunday $ 10 Large Medium 2X1 $130
Value/Pri Meal
ce Eco Double Hamb. Meal $33 Mega box $65 French Fries $ 10
Products Eco Crispy Meal $33 Chicken strips $45 Small Soda $ 10
Mini combo $29 Chicken Hamb. $ 20
Two Chicken pieces $29

Source: Client Hamburger Chain Business Unit Marketing Information; A.T. Kearney analysis
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 Hamburger Chain Business Unit

Taking into consideration the previous analyses, the following

price adjustments were proposed

Price Adjustment Proposal

• Adjust prices in 5.3% for all products, maintaining aligned prices with product
segments and to cover reduction in margin from early 2008
Immediate • In particular:
adjustment for • Increase 3 pesos to all Kids, Jr. meals and individual products, with
inflation(1) exceptions (i.e. ice cream cones, large and medium size modifiers)
• Additional increase in 1 peso for medium and large size modifiers

Low Elasticity
Products
(Elasticity near or • Don’t increase prices, in addition to specific inflation
below 1)

High Elasticity
Products • Increase promotions
(Elasticity greater • Introduce value/price products, i.e. Low-end products ($10 & $15)
than 1)

Notes: (1) Client had already adjusted prices by 2.6%

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 Hamburger Chain Business Unit

As a final step, price adjustment proposals were expected to

return the Hamburger Chain to 2007 profit levels by August 2009

Gross Profit Impact

(%)

67.9% 2.6%
65.0% 0.4% 3.5% 65.0%
2.1% 60.3% 0.2% 1.8% 61.9%
VAT
2.9%

Accum Accum Net Accum Margin Est. Gross Beef Prices Est. Gross Beef Price Gross Profit
Gross Profit Profit with margin reduction Profit increment increase Profit increment increase
with VAT VAT reduction

Jan – Jun Jan – Jun Jan – Jun Jun – Aug Aug Oct Aug 2008 Dec 2008 Oct 2008 Ago 2008 Ago 2009
2007 2007 2008 2008 2008 2008

A.T. Kearney 05/08.08/ 42-5241-02 25

Pricing Strategy

 Introduction and Approach Overview

 Pizza Chain Business Unit

 Hamburger Chain Business Unit

 Conclusions and Next Steps

A.T. Kearney 05/08.08/ 42-5241-02 26


Conclusions and Next Steps
Costs
• Agree transactional principles
between the Supply, Pizza
Chain and Hamburger Chain
Business Units: Supplier costs,
margin and exchange rate
effect
• Standardize process between
Corporate Finance (Holding),
the Supply, Pizzas Chain and
Hamburger Chain Business
Units, as well as with suppliers
• Establish a systematic
communication channel
between the Holding, the
Supply, Pizzas Chain and
Hamburger Chain Business
Units
Competence, market
segments and products
• Get into deep in market
analysis and the
understanding of the
market/product strategy of
main competitors
• Articulate value proposition to
market segments and
products offered by main
competitors
• Asses relevant attributes from
each value proposition and
validate according to price
and competence
• Design products to
complement portfolio and
market segment targets
• Develop market intelligence
tools to facilitate market
assessments
Conclusions and Next Steps
Pricing Strategy
• Simplify pricing structure for
the Pizza Chain Business Unit
• Align pricing structure to value
proposition and elasticities
• Define strategy for promotions
accordingly to goals in each
segment/market
• Evaluate impact from
adjustments in prices
continuously over revenue
and profit
• Agree processes, roles and
responsibilities for further
follow-up at Business Units
and Holding levels
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