s a consequence, many firms entered with ice creams with intermediate levels of smoothness between Ben&Jerry’s and Haagen-Dazs. How could you represent

Principles Of Marketing
17th Edition
ISBN:9780134492513
Author:Kotler, Philip, Armstrong, Gary (gary M.)
Publisher:Kotler, Philip, Armstrong, Gary (gary M.)
Chapter1: Marketing: Creating Customer Value And Engagement
Section: Chapter Questions
Problem 1.1DQ
icon
Related questions
Question

a.

Knowing that price competition is very fierce in this market, is firms’ choices of maximum
differentiation optimal? 

b.

Imagine that entry in this market became easy and, as a consequence, many firms entered
with ice creams with intermediate levels of smoothness between Ben&Jerry’s and Haagen-Dazs.
How could you represent this situation and how will it affect  prices and profits as more firms
entered? How would you expect the level of advertising to change if
entry took place in this market.
b. Both firms advertise heavily to consumers. What do you think that is the effect of advertising
on competition in this market? Based on what you know about this market and the type of product, which type of advertising

would you expect the firms to mostly engage in?

The market for superpremium ice creams is dominated by Ben&Jerry's and Haagen-Dazs, which
compete with non-overlapping flavors and a "chunky" vs. "smooth" concept, depending on the
presence of mix-ins (mix-ins are extra ingredients like chocolate, caramel, candy, and baked goods
that have been added to the ice cream). Using a unit segment to represent smoothness of the ice
cream, Haagen-Dazs (A) produces perfectly smooth flavors (i.e. is located at 0), while Ben&Jerry's
(B) produces perfectly chunky flavors (i.e. is located at 1).
Ice cream consumers differ in their preference for smoothness and are uniformly distributed along
the segment. Each consumer has a disutility (in addition to the price) from departing from their
favorite smoothness, equal to a unit transport cost of t = 2.
Both firms have the same marginal cost c = 10 and no fixed costs.
Transcribed Image Text:The market for superpremium ice creams is dominated by Ben&Jerry's and Haagen-Dazs, which compete with non-overlapping flavors and a "chunky" vs. "smooth" concept, depending on the presence of mix-ins (mix-ins are extra ingredients like chocolate, caramel, candy, and baked goods that have been added to the ice cream). Using a unit segment to represent smoothness of the ice cream, Haagen-Dazs (A) produces perfectly smooth flavors (i.e. is located at 0), while Ben&Jerry's (B) produces perfectly chunky flavors (i.e. is located at 1). Ice cream consumers differ in their preference for smoothness and are uniformly distributed along the segment. Each consumer has a disutility (in addition to the price) from departing from their favorite smoothness, equal to a unit transport cost of t = 2. Both firms have the same marginal cost c = 10 and no fixed costs.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Principles Of Marketing
Principles Of Marketing
Marketing
ISBN:
9780134492513
Author:
Kotler, Philip, Armstrong, Gary (gary M.)
Publisher:
Pearson Higher Education,
Marketing
Marketing
Marketing
ISBN:
9781259924040
Author:
Roger A. Kerin, Steven W. Hartley
Publisher:
McGraw-Hill Education
Foundations of Business (MindTap Course List)
Foundations of Business (MindTap Course List)
Marketing
ISBN:
9781337386920
Author:
William M. Pride, Robert J. Hughes, Jack R. Kapoor
Publisher:
Cengage Learning
Marketing: An Introduction (13th Edition)
Marketing: An Introduction (13th Edition)
Marketing
ISBN:
9780134149530
Author:
Gary Armstrong, Philip Kotler
Publisher:
PEARSON
MKTG 12:STUDENT ED.-TEXT
MKTG 12:STUDENT ED.-TEXT
Marketing
ISBN:
9781337407595
Author:
Lamb
Publisher:
Cengage
Contemporary Marketing
Contemporary Marketing
Marketing
ISBN:
9780357033777
Author:
Louis E. Boone, David L. Kurtz
Publisher:
Cengage Learning