Final answer:
Managers should consider a strategic shift to premium products when customer preferences lean that way, especially as competitive markets incentivize innovation which can be profitable. If an input cost rises, firms may adjust production technology to manage costs, influenced by market structure and price elasticity of demand.
Step-by-step explanation:
The company's managers should give serious consideration to changing from a low-cost/low price strategy for multi-featured cameras to a different strategy in the multi-featured camera market when customer preferences shift towards exclusive and premium features. This change in consumer demand implies that a low-cost strategy may no longer align with what customers are seeking. In this case, adapting to a strategy that emphasizes high-quality, premium products could align better with the new market conditions. Moreover, market competition serves as a catalyst for innovation, and companies that innovate can often secure a temporary competitive advantage, enabling them to earn higher profits before their competitors catch up.
When an input becomes relatively more expensive, firms might seek to alter their production technology to avoid increases in overall costs. This could include finding alternative inputs, investing in more efficient technology, or redesigning the production process to be less dependent on the expensive input. The decision will be influenced by market structure, the price elasticity of demand for the product, and the firm's ability to pass increased costs onto the consumer without losing market share.