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Strategic Pricing Decisions in Supermarkets

During recessionary times, commodity prices may not fall - in fact, many consumer commodity prices frequently continue to rise. For example, in 2008, the average price for a gallon of gasoline was $1.85. In 2012, the price for a gallon of gasoline rose to nearly $4.00/gallon. Not unexpectedly, food prices have risen as well, with the costs to feed a family of four rising over 20% during the same period. Additionally, governmental mandates for "Bio-Diesel" fuel have created a shortage of corn, further exacerbating the rise in global food prices.

Explain how you believe the rising prices affect strategic pricing-decisions made by companies that produce packaged food, cereals, canned meats and other common products found in a supermarket. Your discussion should include an examination of how consumer behavior might impact those pricing, marketing, and packaging decisions.

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Rising costs affect strategic pricing decisions of companies that produce groceries because they ultimately, these companies are in business to develop profit and they must react to impact in cost as well as the economy. Packaged food suppliers must determine if it is possible to cut back in one way or another, perhaps operating more efficiently, changing package size, or ...

Solution Summary

This solution explains why rising prices affect strategic pricing decisions made by companies that produce packaged foods for supermarkets, and how consumer behavior might impact those pricing, marketing, and packaging decisions.

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