Today, I went to Simply Pasta (@ UBC SUB) for lunch.
I haven’t been there since this semester and was surprised to find that there were not too many people waiting. Usually, there are long line-ups in front of Simply Pasta, especially during lunch peak hours. Thus, I was happy, but when I was ordering, I found that the price per serving has increased from $5.75 to $7.25, a 26% increase! I also noticed that pasta and topping remain unchanged. Moreover, prices other food stands in the cafeteria charged also did not change. Therefore, I was wondering what would justify such pricing strategy.
People buy a certain product because their perceived value (benefits-costs) of the product is high. The pasta and topping remain the same, which means customers derive the same benefits as before. However, they now have to pay higher prices for the same benefits. No wonder some people would just simply turn away. I don’t think the price increase would be beneficial to Simply Pasta, because their target market is college students, who are relatively price-sensitive. Therefore, chances are that, increasing price would not increase their sales in terms of $ amount. What’s worse, there are plenty good substitutes for pasta in the cafeteria. The greater the availability of substitutes products, the higher the price elasticity. The price increase, therefore, may not be a wise choice for Simply Pasta. Evidences also support such reasoning, as less people are lining up, showing a negative consumer reaction to such price increase. Simply Pasta simply need to rethink.
-END-