Pricing Tables with a View

John operates a waterfront restaurant. Window tables with views are a lot more popular than tables without views, and pre-bookings often depend on the availability of window tables. Over the years, John has introduced different menus and prices for lunch and dinner guests, weekends, and public holidays, to reflect peaks in demand. John is starting to get fed up with the fact that he could sell each window table several times for lunch or dinner but sometimes struggles to fill other tables. He is now considering introducing an access fee or percentage surcharge for premium window tables. He believes this is justified and says that no one would complain about paying extra for a better hotel room, a business class flight ticket, or a premium seat at the opera.

[Source: Lovelock, CL, Patterson, PG, & Walker, R 2015, Services marketing: an Asia-Pacific and Australian perspective, 6^th edn, Pearson Australia, NSW.]

Required

a. How can the pricing tripod approach to service pricing be useful to come to a good pricing point for a particular service? Compare the functional and strategic roles of the new pricing approach that John is considering.

[6 marks]

OR

b. Compare and contrast the different pricing objectives and their implications for pricing decisions. What underpins the assumption that some of his clientele will be willing to pay the increased fees?

[6 marks]

c. What are the important price-setting considerations in the case of a business such as Johns, and why?

[4 marks]

[Section A = 10 marks]