Question

Assume that the low-calorie frozen, microwavable food company from Assignments 1 and 2 wants to expand, and has to make some long-term capital budgeting decisions. The company is currently facing increases in the costs of major ingredients.

1. 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. Provide a rationale for your response.

Answer 1

Low calorie, frozen microwaveable food can be regarded as one such a food area that is of high health importance and is often preferred by people who have some really high health consciousness. When the pricing strategies follow in such a way that the prices of the products relatively rise on the whole, it tells that the elasticity of demand determines the overall profit on the whole. Promotion of importance of low calorie food through various awareness programs and rallies can enable people to attarct a lot towards this sort of food structure in their routine and taking the health importance into consideration, the price change can be less elastic than expected which is a desirable outcome all in all.