Week 9 EOC - McDonald's $10 Burger?

“McDonald's, which has experienced excellent sales during the recession, is going head-to-head with Hardee's and Carl's Jr. restaurants, both of which now offer mammoth Angus burgers priced at around $4. The latter two, which are owned by the same company, even say they'll refund a customer's money if he or she prefers McD's Angus burger to theirs. Burger King, Denny's, Jack in the Box, and Wendy's are all either in the fray, with premium burgers of their own—sirloin burgers, steakhouse burgers, and so on - or they will be soon, per USA Today."
(http://money.blogs.time.com/2009/09/18/fast-food-burgers-go-big-13-pounders-900-calories-4-and-up/)

It’s just a matter of time before McDonald’s will come up with a burger to top all others. They could charge $4, which is the status quo pricing on specialty burgers at the fast food joints. “Although status quo pricing has the advantage of simplicity, its disadvantage is that the strategy may ignore demand or cost or both. If the firm is comparatively small, however, meeting the competition may be the safest route to long-term survival.” (Lamb Hair McDaniel, pg. 280.)

My thought is that, since McDonald’s does not have to worry about being small, they could charge $10 for a super, duper, fantabulous burger that promises to be even better than any of the big burgers coming from the competition. Charge $10 per burger, $20 per burger, whatever amount they wanted to charge. If the price causes no demand, or lack of sales for that one particular item, they still make money off all of the other products. If even only one person buys a $10 burger, McDonald’s will still make a profit. “Price skimming is sometimes called a ‘market plus’ approach to pricing because it denotes a high price relative to the prices of competing products…..companies often use this strategy for new products when the product is perceived by the target market as having unique advantages. Often companies will use skimming and then lower prices over time. This is called ‘sliding down the demand curve’.” (Lamb Hair McDaniel, pg. 278-229.)

Obviously, there are people who see a unique advantage to eating a burger that costs $10. Burgers priced at $10 or more are sold in restaurants. As we know about the fast food society we live in, people don’t want to wait, or be waited on most of the time. They want their food quickly, but why should they have to sacrifice quality, if they are willing to pay the price? For the same price, they can go to McDonalds for an Angus Corned Beef Kosher Burger served on pure grain whole wheat bun, topped with organically grown lettuce, onion, and tomatoes, and be out of there in less than 20 minutes.