Question

Wholesome Pet Food has successfully specialized for 20 years in high-quality pet food made from all-natural ingredients and organically raised lamb. This brand has a strong following and is recommended by veterinarians who practice in affluent neighborhoods. Wholesome's main supplier of lamb has announced that the price for lamb will be 15 percent higher next year. Which of the following statements is true?A. Wholesome will probably be able to pass the cost on to its customers because they are less sensitive to price increases than the average buyer.B. Companies pursuing Wholesome’s business strategy are especially vulnerable to this risk.C. If Wholesome raises its pet food prices, customers will turn to less expensive brands such as Purina.D. Wholesome probably operates on very thin margins, and a cost increase will threaten its ability to earn average returns.

Answer 1

Answer:

A. Wholesome will probably be able to pass the cost on to its customers because they are less sensitive to price increases than the average buyer.

Explanation:

Wholesome pet foods has been providing services for 20 years and the are considered specialists in high quality pet foods. Their Strang brand following will make it possible to pass on the increased 15% cost of lamb next year.

Their clients have developed an attachment to the brand so they will be less sensitive to price increases, knowing they will always get quality product from Wholesome Pet foods.