Question

Pure Forever Inc. is a milk processing and packaging company. The company charges $2 for a 500 ml flavored-milk pouch in the market. Due to an increase in the cost of certain milk processing machinery, the company decides to reduce the quantity of flavored milk in a pouch from 500 ml to 300 ml for the same price. Which of the following strategies is being illustrated in the given scenario?a) downsizingb) price skimmingc) product proliferationd) product sabotagee) predatory pricing

Answer 1

Answer:

The correct answer is A: downsizing

Explanation:

When a company suffers from an increase in costs it has two options: increase the selling price or offer a smaller amount for the same price. This is called product downsizing. Consumers are more susceptible to price changes than to reductions in product quantity. Therefore, companies often decrease product sizes. When consumers notice a reduction in their products, they have a negative reaction.