Final answer:
To avoid failure due to changes in consumer preferences and competition, businesses can conduct market research, increase advertising budget, and reduce product prices.
Therefore, the correct options are:
1) By conducting market research
2) By increasing advertising budget
3) By reducing product prices
Step-by-step explanation:
The theory of consumer choice is the branch of microeconomics that relates preferences to consumption expenditures and to consumer demand curves.
Failure to recognize and respond to changes in consumer preferences and competition can indeed be a downfall for a business.
However, there are several ways to avoid this:
- Conducting market research: By conducting thorough market research, businesses can gather insights into consumer preferences, identify potential competitors, and stay updated on market trends. This allows them to adapt their products and strategies to meet changing demands.
- Increasing advertising budget: Allocating a larger budget for advertising can help businesses reach a wider audience and create brand awareness. This can attract new customers and retain existing ones, mitigating the impact of competitors.
- Reducing product prices: A business can stay competitive by offering competitive pricing. This can help attract price-sensitive consumers and incentivize them to choose their products over those of competitors.