Eco 550 week 6 assignment 2

Topics: Supply and demand, Monopolistic competition, Economics Pages: 8 (1463 words) Published: November 30, 2014

Operations Decisions
[Type the document subtitle]

Dr. Castorina
Eco 550

There are a lot of frozen food and low calorie microwavable food options available in the market. A few years ago people were not able to purchase the microwavable food but with the increase in income, people can now afford an easier lifestyle and can change the way they cook breakfast, lunch, and dinner. Because microwavable foods are easy to cook, people are replacing traditional cooking methods to microwavable foods, I for one know that it makes my life so much easier to do this at least once or twice a week. A few of the companies that are manufactured are Lean Cuisine, Healthy Choice, Stouffers, Marie Callendar etc. But the two we will focus on are Lean Cuisine and Healthy Choice. They both are competitors in the market of frozen foods, but more specifically they are competitors in the low calorie frozen food department. Lean Cuisine was started in 1981 and has since then grown its market in US, Canada and Australia. The company is owned by Nestle and offers variety of frozen foods and is one of the leading choices for low calorie food. Healthy Choice, the product manufactured by ConAgra is also one of the leading low calorie frozen food suppliers. Healthy Choice is the biggest opponent to Lean Cuisine (foodbusinessnews.net). As far as the market sector: it is decided by three criteria which are Behavioral, Psychographic and Profile variables. Behavioral variables are those that are wanted from the product, and buying patterns such as frequency and volume of purchase which might be considered the fundamental basis of any company. The Psychographic variables are used when the company’s’ purchasing behavior correlates with the personality or lifestyle of customers. There are consumers who have different personalities and their lifestyles are more indecisive towards a specific product. Their choices are determined by their economic and social standing so with that being said a person may choose what fits into their budget over what is more popular or what tastes best over what has less calories. Profiling is not as important of a criterion for market segmentation. Once the company has decided what the differences between markets are, they have to decide how they are going to execute the plans. Profile variables like socio-economic group or geographic locations are very necessary in deciding the target audience which can give a competitive edge. In Monopolistic competition there are few dominant firms along with a large number of competitive firms. The thing that sets the dominant firms apart is that they sell product that are differentiated in some way such as: real perceived, or just imagined. Individual firms make independent decisions, and it is easy to enter or exit the market but there are significant barriers when entering the market with leading brands. The cross-price elasticity of demand between the products of individual firms is much lower than in purely competitive markets (McGuigan, J. R., Moyer, C.R., & Harris, F.H. 2014). When the market becomes more concentrated, there would be a possibility of fewer firms in the industry. This in turn means if there are fewer firms in the industry, they can have more control on the price for the product. When this happens the monopolistic competition turns into oligopolistic competition. Oligopoly market has few firms and each firm must consider the reaction of the rival firm and keep up with price, production, or product decisions. All the reaction that firms make is interrelated. Also, if all the firms in the monopolistic market would start changing price and compete using the price, firms would start realizing that their profits are reducing. Another factor that will make monopolistic competition to turn into oligopolistic competition is making the product alike. Monopolistic firms have to keep producing products that are different in their own way or consumers won’t buy...

References: www.ibisworld.com. Retrieved on August 09, 2014.
http://www.foodbusinessnews.net/articles/news_home/Financial-Performance/2013/08/Nestle_seeks_to_fatten_up_Jenn.aspx?ID={D6AD78D0-5F26-40FA-A4D3-163828854B67}&cck=1 Retrieved on August 11, 2014.
McGuigan, J. R., Moyer, C.R., & Harris, F.H. (2014). Managerial Economics: applications, strategies and tactics: 13th edition. Mason, Ohio: Cengage.
OTTAVIANO, G. P., & THISSE, J. (2011). MONOPOLISTIC COMPETITION, MULTIPRODUCT FIRMS AND PRODUCT DIVERSITY. Manchester School (14636786), 79(5), 938-951.
Serwer, A. E., & Sookdeo, R. (1994). HOW TO ESCAPE A PRICE WAR. Fortune, 129(12), 82-88.
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • ECO 550 WEEK 6 CHAPTER 11 AND CHAPTER 12 PROBLEMS Essay
  • ECO 550 Assignment 2 Operations Decision Essay
  • ECO 365 Week 2 Essay
  • ECO 550 Final Exam Essay
  • ECO 550 Midterm Exam Essay
  • Eco 550 Assignment 2 Essay
  • ECO 550 WEEK 2 CHAPTER 3 AND CHAPTER 4 PROBLEMS Essay
  • ECO 550 Final Exam Essay

Become a StudyMode Member

Sign Up - It's Free