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Introduction 2

Questions 3

What is the product totality for a business like Mr Herrera’s? 3

What are the challenges faced by the characteristics of such a business? Do you reckon Mr. Herrera has a problem with them? 3

Critically discuss the case based on pricing concepts and yield management concepts. 4

Why was Mr Herrera reluctant to raise his prices? How did these low prices almost destroy the business? 5

Using this case as an example, explain how the concepts of demand, price and profits are interrelated? 6

Use other pricing concepts covered in class to discuss this case 7

What evaluation process do you think Mr Herrera had to go through to determine the new prices? 7

Discuss Mr Herrera’s target market and compare his positioning strategy before and after the price adjustment. 8

Conclusion 9

Introduction

The Mexicatessan was a warm, friendly Mexican restaurant. It had long history. The restaurant front entrance is laden with business cards stapled over the last 30 years. A World War II photo of the owner adorns one wail and Mexican motifs line the walls and ceiling right next to the window air conditioners. Mr. and Mrs. Herrera established the Mexicatessan in 1957. The restaurant, located in a lower-middle-class neighborhood, attracts both locals and Houston's rich and famous.

When the restaurant opening for 23 years. the profitability started to drop, due to the location and the needed of guest. also he is trying to make the balance of the product . but he is only receive very little reward for his time and investment. The problem is that the mexicatessan’s price is far from the competitor. He is keeping the lowest budget because he is believed that the lowest price can attract people. But he never think to keep the relationship with the guest so that the guest don’t have loyalty with this restaurant.

Finally Mr herera realized this problem. He pay for the new roof. Hire more staff, the restaurant indoor fiment....