Components

Case Study

A Company Named $5 Pizza: Is Using the Price as a Namesake a Timeless Enticement or a Dangerous Overpromise?

Nikolaus T. Butz, Marissa M. Warzynski, Ricardo Boeing
February 27, 2023
SKU:
BUS-008987
Region: 
North America
Topic: 
Marketing & Sales, Economics, Entrepreneurship
Length: 
14 pages
Keywords: 
pricing decisions, entrepreneurship, Relationship Marketing, naming a business, pizza, cost per unit, inflation
Student Price: 
$4.00 (€3.75)
Average rating: 
0

Pizza originated in seventeenth-century Naples, Italy, where it became a mainstay for the poor. In the twenty-first century, pizza was no longer considered food for the poor, but its economic attainability remained an important brand element. To that end, the price of the pizza became the namesake of a 2008 startup called $5 Pizza. Since its founding, however, economic conditions had eroded the purchasing power of the U.S. dollar to the point that an item that cost $1 in January 2008 would have cost approximately $1.37 in April 2022. What would a person’s reaction have been if they walked into a $5 Pizza store and the cheapest pizza on the menu was $6.85? In the second decade of the twenty-first century, serval $5 Pizza stores closed. The remaining franchisees had to decide between trying to remain profitable at their namesake $5 price point, changing their businesses’ name, or shutting their doors forever. 

Learning Outcomes: 

In completing this assignment, students should be able to:
1. Identify pricing strategies that can be applied to justify or correct a pricing decision
2. Assess a future pricing decision based on the forecasted impact of a downward inflation
trend
3. Apply relationship marketing to the challenges facing a company with a quantifiable
amount in its name