Pricing Strategy River Side Cafe - Essay Example

This gives River Side Cafe a distinct competitive advantage over its competitors as its unique Mexican style attracts and retains coffee and tea lovers at its premises. Therefore, the premium pricing strategy is the best strategy for River Side Cafe to adopt because it is also a new entrant into the market with the hope of maximizing its revenues especially in the first stages of the cafe’s product life cycle (Smith, 2011). River Side Cafe is a new player in the tea and coffee industry. As such, it has to curve out a name for itself in the beverages service industry in order to attract and retain loyal customers.

However, it faces stiff competition from established industry players who already have reputable brand names and command a large share of the market. These include the likes of Tchibo, Nestle, Wal-Mart and Starbucks. These companies have a wide capital outlay to expand and promote their business thereby remaining relevant in the market over a long period. Therefore, River Side Cafe has to establish its own competitive advantages in order to enter this strongly guarded beverages market. Owing to its unique features in brewing and serving coffee and tea, the cafe also incorporates a pricing strategy in order to penetrate the market further (Jensen, 2013).

Premium pricing is the best pricing strategy for the cafe to use in entering the beverages business under such competitive markets. This strategy gives the cafe class, style and prestige as well as promoting its clients’ base through word of mouth references. Being a new kid in the block and charging high prices for their products and services attracts high-end consumers as well as establish a reputable