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Author Question: If grocery stores are able to place their own private label generic products wherever they wish, why ... (Read 122 times)

asan beg

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on: Jun 29, 2018
If grocery stores are able to place their own private label generic products wherever they wish, why do some managers deliberately put them on shelves that are hard to get to or difficult to notice?
 
  What will be an ideal response?

Question 2

What is the factor substitution effect?
 
  What will be an ideal response?


ms_sulzle

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Reply #1 on: Jun 29, 2018
Answer to Question 1

It may be that people who are only willing to pay for the lower-priced generic are also the same people that are willing to hunt for it in the store. People that are less sensitive to price may simply purchase the higher-priced name brand products that are at eye level and not bother with taking the time to look for the lower-priced and hard-to-find generics.

Answer to Question 2

The factor substitution effect is the tendency of firms to substitute away from a factor whose price has risen and toward a factor whose price has fallen.


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