In the first place, Bargain Brand Cereals low-priced breakfast cereals have only been on the market for one year - a very short time in terms of analyzing the overall success or failure of a product. With such a short history, it is impossible to evaluate the long-term viability of the product in the marketplace, particularly with respect to the actions and reactions of competitors. The marketing director even mentions in his or her memo that the top brands have already tried to compete by lowering prices. It is likely still too early to tell what effect that will have on the future sales of Bargain Brands cereal. Additionally, the marketing director states that several of the companies producing the top-selling brands plan to introduce their own budget brands, indicating that they have not yet done so. He or she also states that Bargain Brands has never had to raise its prices to continue making a profit. Although that may be true because the competition has not yet fully reacted, the other companies are organizing a direct attack on the Bargain Brands cereal - companies which likely have tremendous funds available for launching these new bargain products, possibly even selling them at or below cost to try to drive Bargain Brands cereal out of the market. Faced with these current and upcoming battles, the marketing directors conclusion that they should launch other low-priced food products as quickly as possible might be foolish rather than wise. The company may need to save its funds to try to survive in their current market rather than extending itself out into more fields of competition.
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