The Power of Pricing

Three levels of pricing (according to “The Power of Pricing” published in McKinsey Quarterly):
1. Industry price
2. Product/market strategy level
3. Transaction level

Hofbrauhaus has arrived!

. . . “It’s wunderbar!” The famous brewery that originated in Munich, Germany has made its way to Pittsburgh. We are one of only 4 sites in the states privileged to house this hot, new establishment. Traditionally, the Hofbrauhaus in Munich was one of the beer halls used by the Nazis to hold various functions. It has since become a world-renowned attraction that every local and tourist has visited.

I got a chance to undertake the HB experience and I must say it is definitely something to see! The brewery only serves their home-brewed beers and they had 4 on tap to choose from. Everything is about the beer! They are made according to the original recipes that have been passed down though German ancestry for over 400 years. And you probably won’t leave sober. You can choose to have a 0.5 or 1 whole liter of draft, or if you are even more heroic, go for the “boot.” Everything about Hofbrauhaus is just like in the movie Beerfest—and I thought my dreams would never come true. Although you won’t see any non-beer drinkers, there is alternative alcohol to choose from. The “shotskis” are second best.

The beer hall is where everything is happenin’. The lively German band is playing while people dance on the benches and tables. The band is also very good at encouraging guests to drink. . .so beware! The servers look like they came out of a Bavarian magazine—all dressed in traditional attaire. To top off a fun night of drinkin, you can rely on the food to satisfy any craving! The extensive menu features classic Bavarian entrees, appetizers, and more. . .and every bite I tasted was delicious!


I can’t hide my excitement about Hofbrauhaus coming to the South Side Works. However, I did have a discussion with my boyfriend as to why they chose to build one in our city versus another.
My theory was:
1. South Side Works is an up-and-coming location that is an extension of the bar-intensive East Carson Street
2. High end retail stores make it an approachable place (rather safe too)
3. Cities like NYC wouldn’t want a free-standing monstrous restaurant in the middle of a crowded, fast-moving, shopping district (space issues)
4. Other places may have markets that feature even higher end dining (to serve the high class population) and wouldn’t want to be disturbed by the crazy entertainment and drunk people stumbling out OR they are lower class areas where the brewery would never survive.

I came across a blog that featured an interview with a member of Hofbrauhaus Pittsburgh’s franchising team. This was his answer to my curiosity:
Why did you decide to build there?
“It’s got a lot going on around it. It’s a first-class development, great tenants: Cheesecake Factory, McCormick & Schmick's, Ann Taylor. That’s where we wanted to be. We’re in walking distance of eight universities, too, and we sell beer, you know.”


Makes sense! Pittsburgh’s SSW has perfect market conditions.

Internet Research- Product Pricing and Channel Selection

gray-market- trade of a commodity through distribution channels unintended and unauthorized by the original manufacturer
• In contrast to the “black market,” which is illegal (either the goods themselves or the distribution channel), the gray-market is legal
• Companies selling the commodities may have no relationship with the producer
• Often occurs when the price of a product is significantly cheaper in another country
• Very hard to track because once a product is sold to an unauthorized dealer, the manufacturer has no way of tracking the sale of the product

Parallel market- importation or trade of a non-counterfeit product from another country without the permission of the property owner
• May interfere with the marketing scheme of the manufacturer

Market diversion- sell or trade of products outside the manufacturer’s intended channel of distribution