Sunday, June 5, 2011

Price is not a Good Differentiator

I have noticed that many bars now have two Happy Hours. Maybe 4 to 6 and 10 to 12. Why are they adding a second Happy Hour? And why are they more than one hour? The purpose is to increase business during a slow time. But who will be the customers?

What they are doing is trying to gain customers from a competitor. How will the competitor respond? More of the same price-cutting?

Price is not a good differentiator. In Seattle where there are many places with two Happy hours where they feature drinks and food. I no longer go out to dinner. I go to a Happy hour and get the same things but cheaper. And they are selling at less than cost. Those folks are competing with themselves on price. They should stay away from auctions.

In Boston one bar in a great location downtown offers a personal pitcher. 32 oz of beer for $2.75. That's barely double their cost.

Happy Hour came into the public vocabulary in 1960 when the Saturday Evening Post ran an article about military life. I remember years ago going to the Officer's Club in the Canal Zone in Panama. There was a Happy Hour at 5pm. This was the time to end the day and have a drink before going in to dinner. The bar was on a high up patio. I remember the setting sun over the canal and the rest of the base. There were no special prices. The event was defined by the time and the regularity.

What we have today is the same bar with cheaper prices. Who wants to ever pay regular price?

Better they should all define themselves by the experience, the ambiance, the service or the type of food.





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