Outline A Plan For Managers In Low Calorie Frozen Micro

Outline a plan that managers in the low calorie, frozen microwaveable food company could follow in anticipation of raising prices when selecting pricing strategies for making their products response to a change in price less elastic

The assignment requires developing a comprehensive plan that guides managers of a low-calorie, frozen microwaveable food company on how to effectively raise prices while minimizing the adverse impact on demand, reflecting a strategy to make their products less price sensitive or elastic. Additionally, the plan must be justified with a clear rationale explaining the economic principles behind the approach, particularly how elasticity influences pricing decisions and revenue optimization.

Paper For Above instruction

In the competitive landscape of the frozen food industry, especially within niche markets such as low-calorie and microwaveable foods, pricing strategies are crucial for maintaining profitability and market share. When managers consider raising prices, understanding and influencing the price elasticity of demand becomes essential. Elasticity measures how sensitive consumers are to price changes; products with less elastic demand allow for higher pricing without significant reductions in sales volume. Consequently, developing a strategic plan to make products response to price changes less elastic involves multiple coordinated approaches centered on differentiation, branding, and customer loyalty.

The initial step in the strategy involves enhancing product differentiation. Managers should invest in product innovation, such as introducing unique flavors or health benefits that distinguish their offerings from competitors. By emphasizing the unique value proposition—such as organic ingredients, gluten-free options, or added nutritional benefits—the company can attract a niche segment willing to accept higher prices due to perceived added value. This differentiation reduces the substitutability of the product, thereby decreasing its price elasticity. According to Kotler and Keller (2016), differentiated products with strong branding tend to have inelastic demand because consumers are less likely to switch to alternatives.

Next, securing brand loyalty is pivotal. Managers can implement targeted marketing campaigns that reinforce brand identity and establish emotional connections with consumers. Loyalty programs, personalized communication, and consistent quality assurance incentivize repeat purchases, which in turn diminishes demand elasticity. As consumers develop a preference and trust for the brand, they become less sensitive to price increases, making the demand curve more inelastic. Keller (2013) emphasizes that brand loyalty diminishes price sensitivity and allows companies to implement price increases with minimal loss of customers.

Furthermore, pricing strategies such as tiered pricing or premium pricing can be employed. For example, introducing premium product lines at higher prices creates an image of exclusivity and quality, attracting consumers less concerned with price and more focused on product features. This segmentation reduces overall demand elasticity for the company’s offerings. The use of price skimming, where high initial prices target early adopters, can also be advantageous in markets with inelastic demand segments.

In addition, improving customer convenience and service quality reinforces product value. Ensuring widespread availability, superior packaging, convenient ordering, and delivery options fosters consumer perception that the product’s value justifies a higher price, thereby reducing price sensitivity. Such non-price competition strategies are supported by Porter’s (1985) competitive advantage theory, which advocates for value-added services to sustain higher pricing.

The rationale behind these strategies is rooted in economic principles of demand elasticity. When consumers perceive the product as unique, essential, or high-quality, their willingness to pay a premium increases, rendering the demand less elastic. As demand becomes less responsive to price increases, the company can raise prices profitably while maintaining sales volumes. This approach aligns with the concept of inelastic elasticity, where total revenue can increase through higher prices without significant loss in quantity sold (Mankiw, 2015).

Implementing this plan requires careful market research and consumer behavior analysis to identify inelastic segments and tailor marketing efforts accordingly. Additionally, maintaining product quality and customer trust is essential, as failure to do so may shift demand elasticity back to more elastic levels, undermining pricing power. Overall, a strategic focus on product differentiation, building brand loyalty, premium segmentation, and value-added services can make the company’s offerings less elastic, allowing sustainable price increases.

References

• Keller, K. L. (2013). Strategic Brand Management: Building, Measuring, and managing Brand Equity. Pearson Education.
• Kotler, P., & Keller, K. L. (2016). Marketing Management (15th ed.). Pearson.
• Mankiw, N. G. (2015). Principles of Economics (7th ed.). Cengage Learning.
• Porter, M. E. (1985). Competitive Advantage. Free Press.
• Samuelson, P. A., & Nordhaus, W. D. (2010). Economics (19th ed.). McGraw-Hill Education.