Despite the increasing consumption of food products, driven by population growth, advancements in information technology have made people in the developed world more aware and concerned about their health. Certain low-fat, low-calorie food products that have been available for a long time are now gaining greater acceptance as their nutritional benefits are being recognized.
The global food industry is witnessing a significant shift as an increasing number of manufacturers are responding to the rise in social awareness and interest in health and wellness. In order to meet the growing demand, many food companies have been altering their business models. Over the past few years, there has been a surge in popularity for low-calorie and low-fat foods. Leading competitors in this sector include Healthy Choice and Lean Cuisine. These companies have a strong market presence and customer base, with Lean Cuisine being established in 1981 as a healthier option to Stouffer frozen meals.
S, Canada, and Australia are markets where the company operates. Initially offering ten items, it now offers over 100 different meals. Being owned by Nestle, a global leader in the food industry, greatly enhances the company’s reputation and expanding product range. A similar situation can be seen with Healthy Choice, a subsidiary of Contra, another well-established organization in the industry. For small companies, competing in the market against such industry giants necessitates considerable intelligence and hard work.
The company’s regression model and industrial analysis illustrate the influence of choreographic and behavioral variables on the low calorie food market trend. These behavioral variables, derived from customer purchasing patterns, are directly associated with the market’s behavior and the demand for a particular product. The number of units sold within a specific timeframe is a clear indication of the product’s market demand. Additionally, the model takes into account environmental factors that impact the market.
The determination of sales volumes is based on these calculations, while the choreographic variables represent the relationship between customer personality and their purchases. The choices made by customers regarding their personality and products largely depend on the lifestyles they are familiar with. Nowadays, customer product preferences can be easily inferred from their shopping style. Before analyzing the market structure of low calorie foods, it is important to conduct a study on the target audience for these products.
Considering the demands and needs of the target market is crucial for driving company sales. Neglecting audience analysis can lead to failure. Additionally, analyzing the growth trend of the target market is essential. By predicting market trends, companies can determine the most suitable products to offer globally or domestically. The structures vary and are flexible depending on the situation.
The company in question should adopt a market structure that aligns with its needs and enhances its competitiveness in the food industry. This structure should prioritize customer satisfaction and can be formulated accordingly. Additionally, it is crucial to analyze employment trends and inflation rates. Implementing a customer-friendly pricing strategy is also a significant aspect that should be addressed (Perform, 2004). 2. The primary factors influencing changes in market structure are shifts in customer preferences and income levels.
These two factors, demand and needs, are directly connected. As customers begin to earn more, they tend to buy more and expensive products, thereby increasing their purchasing power. Conversely, when customers have lower incomes, they are less inclined to purchase expensive products or buy in large quantities. This implies that the sales revenue of a company heavily relies on the purchasing abilities of its customers.
The customer taste is an important factor to consider. If customers like a certain product, they are more likely to purchase it even if it is expensive. Conversely, they will not be interested in buying something they don’t like, even if it is cheap. The company cannot control customer taste, but they can have some control over it. Therefore, when designing products and developing pricing strategies, the company should take these factors into account in order to establish a customer-oriented business (Best, 2000).
To analyze short run and long run cost functions, the calculation of ETC, PVC, PVC, and TACT is necessary. The following equations are provided:
ETC = + Q + 0.0063212Q^2
Q = Quantity demanded
Qs = Quantity Supplied
26770 = ?
Pee = -34679.89 (from Assignment 1)
121.0989 = 286.37 cents (from Assignment 1)
Calculating Q:
Q = -7909.89 + 79.0989(286.37) = 14741.66 (from Assignment 1)
Calculating PVC:
PVC = Q + 0.0063212QA^2
PVC = 100*14741.66 + 0.0063212*14741.AA
PVC = 148790301.3 -100 + 0.012642*14741.6 -286.3640 + 100*14741 .66 + 0.0063212*14741 .AA
PVC = 308790301.3
Calculating TACT:
TACT = 308790301.3/14741.66 -20946.779
Calculating surplus:
Surplus = 0.5 x 286.37 x 14741.66 = 2110784In both the short run and the long run, equilibrium is achieved when the quantity is equal to the price, resulting in a balanced distribution across all areas. The above calculations illustrate this concept. However, it’s important to note that equilibrium calculations are not fixed and can be influenced by various factors, such as changes in raw material costs, customer income levels, customer preferences, and the prices of competing products.
Due to these factors, the equilibrium quantities can be altered, allowing the company to determine if the current price is optimal or not. If it is not, the company should make necessary adjustments such as reducing product prices to attract more customers. By setting prices intelligently, the company can expect long-term sales growth. Additionally, a business may decide to end operations of a facility or division based on various factors.
The facility may close and its assets sold if the products it produces become obsolete or lose appeal to buyers. If the facility’s equipment cannot be adapted to make other sellable products, it is necessary to take this step to prevent further loss (Weeklies). In this case, if the company can no longer compete in the market due to declining demand for its products resulting from demographic changes or the introduction of competitively priced alternatives, discontinuing operations should be considered.
Before ceasing operations, the company should explore other options such as transitioning to a different product line in order to keep the business running. If the facilities used for production can be repurposed to manufacture a different product, this should be considered as an alternative solution. However, if the company wants to minimize both fixed and variable costs in the long term, it would be more advisable to discontinue operations and dispose of the related facilities. Additionally, there is a significant amount of data available regarding the price elasticity of demand for certain foods.
The study discovered a range of mean price elasticity estimates from 0.27 to 0.81 (absolute values). The highest price elasticity was found for food away from home, soft drinks, juice, meats, and fruit, indicating that these products experienced greater changes in demand as prices changed (source: Am J Public Health). In order to compete effectively in this very competitive market, the company should carefully evaluate the price elasticity of its products compared to those of its competitors and the overall market.
By collecting and analyzing data on social status, income disparity, and other external factors related to its target market, the company can adjust its prices accordingly to maximize profit and remain competitive. Additionally, by studying societal dynamics and aligning its products with changing lifestyles in terms of convenience and healthiness, the company can further increase its market share and profit margin. It is important to note that implementing pricing strategies based on customer income and economic factors can only have a significant impact during challenging economic conditions. In favorable economic environments, changes in demand are typically unrelated to price. Therefore, the company must take additional actions beyond pricing strategy to enhance profitability.
For example, continuously upgrading the quality of its products through research and development can have a lasting impact on their popularity and reliability. In today’s society, where health and wellness are paramount, ongoing improvement of product quality is vital for competitiveness. This can be achieved by researching alternative, cost-effective, and healthier production inputs.
