Colin Owns a Dog Food Business, but Wants to Develop

question 148

Multiple Choice

Colin owns a dog food business, but wants to develop a canine fashion line as a way of expanding his portfolio and increasing sales and profits. One of the things customers love about Colin's company is that all of the products are manufactured locally, creating jobs for young people. Though he does not have a lot of money and hopes that he won't have to hire new staff, he thinks he might have to. Rather than developing a canine fashion line, which of the following alternatives can you suggest to Colin?

• A) Colin should use cannibalization strategy.
• B) Colin should use a market penetration strategy.
• C) Colin should outsource his company's jobs to cut costs.
• D) Colin should consider selling his business to a larger pet food company.
• E) Colin should hire a marketing company to help him promote his products.

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Definitions:

Marginal Costs

The price increase resulting from the creation of an additional product or service unit.

Average Variable Costs

The total variable costs divided by the quantity of output produced, representing the variable cost per unit of output.

Marginal Revenue

Marginal Revenue is the additional income generated from selling one more unit of a good or service.

Profit-maximizing Level

The point at which a business achieves the highest profit, where marginal cost equals marginal revenue.