Question

According to GaGa's Inc., what are the disadvantages faced by similar firms looking to associate their products with already-established manufacturers and supermarket chains? 200 word min

Answer 1

The disadvantages faced by the firm looking to associate their products with already-established manufacturers and supermarket chains are as follows:

1) High slotting allowance charged by already-established manufacturers and supermarket chains - The slotting fee in the frozen section could run as much as $35000 to $40000 just to place one product on the shelf of 600 to 800 stores.

2) The firm may end up having customers who would not necessarily purchase the product

3) The consumer may perceive the product as expensive and a super-premium product

4) The consumers are hesitant of negotiating for a discount at established manufacturers and supermarket chains and hence, would refrain from purchasing.