Case Study Of Dutch Lady

The influence that average cost has on short run production is that when the output of a production run is small the average cost will be higher as the fixed costs are spread across a small number of units of output. Therefore as the production

market, there is price competition. This can lead to price wars and, therefore, lower prices for

Such companies include Coca Cola Company and Pepsi. Such companies have the ability to offer their products at a lower price due to economies of scale in production. It is important for the product to cut down on overhead costs to ensure that they are able to offer the product at a lower price. Customers will be attracted to other products if the company is unable to meet their price expectations.

Thirdly, option is to strategically adjust the prices of their products because consumers are often very price sensitive. By doing so the company can either create more value that defines the quality and quantity of the product.

In the article, "The Supermarket: Prime Real Estate," written by Marion Nestle, a food studies teacher at New York University, informs us on how supermarkets manipulate us into buying their products. We as buyers are unaware of the brilliant tactics supermarkets use in order for us to make impulse buys, yet they want to blame it on us. "There are precise reasons why milk is at the back of the store and the center aisles are so long," (Nestle 497) by doing this you are forced to look at all the products, therefore you'll end up buying something you unplanned on buying in the first place. There are reasons why small packages cost more than the larger packages of food, Nestle states, "If you buy more, you are quite likely to eat more" (Nestle

‘For any firm changing its price, it is vital to know the likely effect on the quantity demanded’ Sloman and Hinde (2007). Tate and Lyle was thinking of increasing its prices after a decline in profitability due to the rising cost of oil which plays a big part in its energy costs. Tate and Lyle are in a market with very low price elasticity. Sugar is not a very expensive commodity and people will still buy it even if the price goes up slightly. Another aspect is that people become accustomed to sugar in their tea or coffee for instance, so even if prices rose significantly, consumers would not give up their sugar consumption straight away. (Bized, 2005)

As the price of the products is comparatively low, that will increase the purchasing power of the customer and they will buy in larger quantity and thus the company gains the profit. (Soni, P. (2016))

How will a $3 increase in the price of machine parts affect Gina’s own production decisions?

Therefore, Chatime using psychological pricing strategy which is set those ending with nines or other odd numbers on all beverages to stimulate consumer demand and sometimes these are referred to as “just below” prices as they are often “just below” an even price such as RM1.99 vs RM2.00. For example, Chatime instead of charge RM6 for a milk tea beverage you might charge RM5.99 per beverage. Some consumers associate the price closer to RM5 than RM6 even though it is only one cent less and they may subconsciously be partially ignored. The theory that drives this is that lower pricing such as this institutes greater demand than if consumers were perfectly rational. Psychological pricing is one cause of price points to get more customers and the psychological pricing method helps Chatime build an impression of the brand without making significant changes to the product. Simply revising the pricing structure can make the product seem like the best on the market compare with other competitors or elevate the Chatime’s milk tea to the top of the available options. Although the price of Chatime’s milk tea is lower than competitors, customers are those who important of quality and price attributes will buy the products too. It is because customers are relatively insensitive to the product price. Customers willing to pay more for own

The ideal pricing strategy for Whole Foods Market will adopt the cost-plus pricing strategy that takes into account the cost of operations or cost of production plus a constant profit. The organic food market analysis in Namibia indicates that there is a structured market with specific consumer. Organic foods are better produced locally than flown from abroad. Therefore, the cost of producing these foods using the local resources will be expected to reduce the retail cost because local production costs are not equal to abroad production costs (Chris, et al., 2005). Another important pricing strategy ideal for Whole Foods Market is to use psychology of pricing such that the retailer analyses the responses of the market and develop a pricing strategy ideal to that consumer response. However, psychological pricing will depend on the quality of organic foods and consumer services the company is going to offer to its consumers in the foreign market. In return, the consumers are going to respect and pay for quality and healthy organic foods they receive from Whole Foods Market Company. Since the market for the organic food industry in Namibia is already defined as a niche that caters for the elite and financially advantaged in the society, the company will find it easier to price

How many of you have pets that get out of your backyard? were you able to find him? Have you all seen a movie where a child is abducted and held for ransom? How would you feel if you called the animal shelter and they told you they wanted one hundred eighty dollars within twenty-four hours for storing your dog before you are able to get your him back, knowing you couldn’t afford this? What would you feel if the shelter euthanized your dog because you didn’t have the money in twenty-four hours?

Buyer’s Power: Jamba Juice often deals with small individual target market of customers; hence the power of the customer is quite low. The customers have limited ability to influence the pricing of the products. The customer is always are of existence of competing and substitute products and they also keep in mind the price of the products. If Jamba Juice decreases their operating cost, this might help them decrease the prices for the products. (Financial Alchemist)

According to the fallowing article dairy products were once considerate relative “inelastic,” meaning that demand for food staples like milk, butter and cheese varies little with a price. However, with many more alternative for dairy products and more stable prices they are no longer inelastic. Is clearly that the consumers are no just sensitive to prices, but also concern about health for the goods and close substitute like the article mentions Butter and margarine.

Since the demand for the brand has traditionally outstripped supply, the company can easily and without loss charge a premium from its customers. As mentioned the company sells its products at a 100% markup and which in turn translate into increased revenues.

All the costs by a company can be broken into two categories, fixed costs and variable costs. Costs that are independent of output are called fixed costs. Fixed costs remain constant throughout the relevant range and are usually considered sunk for the relevant range. Buildings and machinery are included inputs that cannot be adjusted in the short term. They are only fixed in relation to the quantity of production for a certain time period. The cost of all inputs is variable, in the long run.