In the 21st century, the demand for food is greater than it has been ever before. Food is all around us. There is either a restaurant or grocery store on every corner of every town or an advertisement for food on television. What advertisements fail to display is the time and effort it takes to actually prepare these meals coupled with living everyday life, like going to work, catching your favorite TV show, or helping kids with homework. Cooking food in the microwave has become a staple in many households for preparing quick and inexpensive but tasty, meals. Microwavable meals offer a lot of flexibility in homes. Microwavable meals are not only convenient, but also require minimal time to prepare a healthy treat. The quality of manufactured food products is a major concern from a health and wellness perspective. The advancement of information technology is now concerned about the wellbeing of the consumers of microwavable food. Today, more consumers invest in healthier options that have a collection of nutrition and low calories.
When choosing what microwavable options work best, there are many available. Two leading competitors in the low calorie frozen microwavable industries are Lean Cuisine and Healthy Choice. Lean Cuisine was established in 1981 starting off with only ten items. Lean Cuisine delivered a healthier alternative to Stouffer's frozen meals in the US, Canadian and Australian markets. Healthy Choice on the other hand, was established eight years later and is a subsidiary to ConAgra, which is a large frozen food company in the industry.
Marketing healthy microwavable meals like Lean Cuisine and Healthy Choice is fairly simple. The market segments in the low calorie food market are behavioral and psychographic variables. The behavior variables are based on the market's trends as well as the behavior of the actual customer when purchasing products. Behavioral variables are formed by the purchasing style of customers. For example, the amount of units that are sold in a limited amount of time informs us that the demand of that product in the market is high. Meanwhile, there are the psychographic variables, which are a correlation between a customer's personality and the purchases made. The psychographic variables depend solely on the lifestyle of the customer, which result in the products that they purchase. These variables factor in components such as interests, opinions, personality, self-image, activities, values, and attitudes.
An important analysis of the target audience is considered before examining the market structure. The demand of the target audience/market is to ensure the importance of an audience analysis. From here, a growth trend of the target market is analyzed; when a company can predict the market trends of its customers then they can decide on the type of products to sale. This analysis will help a company to become large competitor against other companies in the food industry. A few things are taken into consideration in the market structure. They are: inflation, trends, and price strategy.
In Assignment 1, due to the change in customer taste and income, the business operations in the market structure changed as well. Both of these factors are related to supply and demand. The customer's income has a huge effect on the market structure of a company. For example, if customers are earning more money, they will purchase more products and possibly expensive products being that they are able to spend more money. On the other hand, if customer's income is low, they will only have the interest of purchasing items that their budget allows them to afford. The size of sales revenue for a company will depend upon the purchasing ability of its customers. The second factor is the customer's taste. If a customer likes a particular product that is more expensive than they can afford, they are most likely to purchase that product solely because they like that particular product that much. On the reverse side, if a customer is not interested in a product, they will be less likely to purchase the product. Overall, the company should design products and make pricing of products that are favorable to the customers to ensure purchases.
Total Cost: TC = 160,000,000 +115.56Q + 0.0063212Q2
Variable Cost: VC = 100Q+ 0.0063212Q2
Marginal Cost: MC =100+ 0.0126424Q
Quality demanded (Qd) = Quantity Supplied (Qs)
26770-42P = -7909.89 = 79.0989P
Pc= -34679.89 (as derived from Assignment 1)
Pc= 286.37 cents (as derived from Assignment 1)
Q= -7909.89 + 79.0989 (286.37)
=14741.66 (as derived from Assignment 1)
VC = 100Q + 0.0063212Q2^2
= 100*14741.66 + 0.0063212*14741.66^2
MC = 100 + 0.0126424Q
= 100 + 0.012642*14741.66
TC = 160,000,000 + 100Q + 0.0063212Q2
= 160,000,000 + 100*14741.66 + 0.0063212*14741.66^2
ATC = 308790301.3/14741.66
AVC = 148790301.3/14741.66
Surplus = 0.5 x 286.37 x 14741.66
The quality is going to remain equal to price which will give the equilibrium amount in all areas. The equilibrium calculations are not constant, meaning they change due to factors such as: raw materials costs, customer income, customer preferences, and the competitor's products. All of these factors allow the equilibrium quantities to be pushed up or down. This information is used to determine whether the price that is being changed will be the optimum price or not. In the event that the price of their products is not the optimum price, they should move forward to reduce the price of their products to meet the customer's income intake. As far as long term is concerned, the sales would increase if they follow the necessary steps to adjust their prices that is affordable for its customers
There are many possible circumstances that could occur which would cause a company to discontinue operations. However before discontinuing operations, the company should try to change a different product line to maintain operations. One example would be seeing if the present equipment is able to produce another product that would sale in the market. The equipment available could possibly save the company from closing. This would be an alternative solution to attempt before discontinuing operations. If a company is unable to produce another profitable product, then I would suggest discontinuing operations. This solution to end operations is the last result to all possible suggestions to prevent this from occurring. If the company can no longer compete in the market due to decline of demand for products with reasonable prices, demographic changes, and or because of the introduction of another competitive product then discontinuing operations would be the best option. Now in the 21st century, technology is taking over many businesses and the best option there is, is to adapt to the market change.
The leading competitors in the low-calorie frozen microwavable food industry must have a solid pricing policy to ensure maximizing its profits. To ensure that each company can compete against one another, they must review the price elasticity of its products against their competitor's products and general market. The companies must study one another by gathering information and analyzing data in regards to income disparity, social status, and adjusting prices to remain a competition in the market. If their competitor has a coupon or bulk deal with five or more microwavable food containers, then the other company needs to come up with a strategy to beat this deal and still make a profit. Competitors must make their low-calorie frozen microwavable food allure in terms of healthiness in congruence of changing the lifestyle of the consumers who purchase their product.
There are many ways a company can improve its profitability and deliver more value to its stakeholders. My first suggestion would be continuously upgrading the quality of its product. When a company investigates on research and development techniques to improve the quality of its products, it has a huge impact on its products popularity and reliability. An ongoing quality improvement of products is important to ensuring it is competitive against its competition. Not investing enough research towards an alternative costs it effective and healthier choice of inputs of production.
The second suggestion to improve profitability and deliver more value to its stakeholders would be to have effective advertising. We all are aware that we need food to survive which makes it highly invigorated via various forms of advertising. The positive impact of a more subtle means of advertising channels will have a positive impact for this company. Advertising for a low-calorie frozen, microwavable food company; could be centered on living a healthy lifestyle, convenience, and exercising/dieting. All of these qualities would contribute to advertising this product to potential consumers.
All in all, a company's success is dependent on supply and demand. If each of the topics previously discussed aren't carefully considered, the company's customers, employees, and products are negatively affected. Microwavable food markets like Healthy Choice and Lean Cuisine are just two examples that show the positive result of investing into a company's success.
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