Question

Baker's product manager continues to perform well in the market. However, a competing product is coming on strong and is looking to take over as the market share leader in the segment. Without sacrificing contribution margin, what can the Baker product manager do in order to improve upon the buying criteria, and thus potentially increase demand

Answer 1

Question options :

Increase MTBF by 2000

Reposition Cake to make it even smaller and higher performing

Increase the promotion budget to gain greater awareness

Lower the selling price since it is the second most important buying criteria

Answer:

Increase the promotion budget to gain greater awareness

Step-by-step explanation:

In this case, some managers might consider reducing price and may be affecting contribution margin in this way(because selling price/profit is reduced and price- variable cost =contribution margin). While price reduction might be a good strategy to compete in the market, it might not be the best option here. in order to increase demand in a case such as this, the manager should consider increasing product awareness so as to reach more potential buyers and increase market share compared to competitors.