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Case 14
Pricing Almost Destroys and Then Saves a Local Restaurant
This case brings up a good opportunity for the instructor to review what affects the pricing
decision. Mr. Herrera’s mistake was that he set his prices based solely on the competition and his
desire to offer a good value. He showed no clear understanding that price needs to work together
with other marketing mix elements in order to determine appropriate strategies.
Chapter 11
1. Why was Mr. Herrera Reluctant to raise his prices? How did these prices almost destroy
the business?
He did not consider customer value perception. Customers felt that the Mexicatessen offered an
excellent quality product that was worth a price much higher than was being charged as was later
2. Using this example explain how the concepts of demand, price and profits are
interrelated.
First managers have to understand their cost structure, this will enable them to understand their