ASSIGNMENT III final.docx - Long-Term Investment Decision...

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Long-Term Investment Decision Assignment III Sharon M. Richie Dr. Diana Bonina ECO 550 Managerial Economics and Globalization December 3, 2017 Plan Outline Company Could Follow to Raise Prices for Product
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Long-Term Investment Decision 1 The business’s goals are to keep the prices of its products as inelastic as possible. The pricing strategy should impact the way the consumers perceive and buy the products. This is not the case for microwavable food products. Managers should be careful when raising their prices, because there are numerous leading brands of healthy microwavable foods. The low-calorie frozen, microwavable food industry has a monopolistic market structure, because they offer products with many different qualities and they can charge a different price that reflects this distinctiveness. Price elasticity is the measurement of how quantity demanded of a good will be affected by changes in its price (Guo, 2012). Managers in the low-calorie frozen microwavable food company need to make their product as inelastic as possible so that they will be able to raise prices. The managers could test the market for their competition with similar products. They could also increase the quality of the low-calorie, microwavable, frozen food product to justify raising the price. Consumers will feel like they are getting a better product at a higher price. Most food prices have a tendency to follow the Price Elasticity in supermarkets. Usually there a 1% increase in price will tend to lower sales by an additional 2% (Lars Perner, PH.D.) The elasticity can be observed so that the demand for the low calorie microwavable manufactured goods is not very elastic in nature. When a decision is made in a company to raise prices, there are several different approaches they could take. The first thing they do is start by increasing the demand for the product. When increasing the price of the product, the consumers should feel as though they cannot live without the product. The business should ensure sure that their customers feel their products are a necessity. Business should look at the fact that all consumers are different and must be looked at individually and from different perspectives.
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Long-Term Investment Decision 2 Nevertheless, at the same time, they must ensure that the thought process used for each customer segment remains the same. Companies should consider adding unique features that the competing company do not offer. They should also consider the innovative implications associated with a price change. Some other approaches that would be help management in low- calorie, frozen microwavable food companies are: “ensuring their pricing strategies take into consideration changes in inconsistent prices and costs, changes in consumer behavior, and price elasticity.” This requires starting their pricing from two points, supply and demand (Laceky, 2009).
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