Question

You are the co-founder and CEO of Fantastic PLC. The below announcement regarding one of the products (product X) your company produces has been brought to your attention by your partner asking you for advice on what the company should do in light of this event:

A documentary recently aired on the health channel followed a scientific research that confirmed products, like product X, contain carcinogenic chemicals in concentrations harmful to human health

Write a report to include the following answers:

• Describe how the above event will affect the demand for product X that your company is producing.

• In light of this change make proper business recommendations (e.g. maintain/increase revenues and/or to maintain/regain/increase customers/market share). Use examples to better explain your answer.”

Answer 1

FIRST QUESTION-

1. undoubtedly the demand for the product would decline with a huge margin.the same would apply for the competitors producing on the same level and basis of production.
2. company would have to decline the price to sell the produced and available stock to recover the money invested in it.
3. profit margin would decline
4. there may be some intervention from the health department which may impact the goodwill and the image of the company adversely

• the above stated are the possible outcome concerned with the demand and situation faced by the company in short run.

SECOND QUESTION-

1. the first step undertaken by the company must be the cross verification of the allegation and challenges made in the documentary and verify the truthiness of the report.
2. it should quickly adapt a better way of production of good which is harmless for users.for example- organic elements used,production without harmless contents etc.
3. the features should be highlighted in the general public through various mode of advertisement ,example- exhibition,print media and electronic media,
4. experimental challenges- there should be invitation to health agency which can come and try the product and prove whether the product is harmless or not.this step would increase the confidence of consumer and increase the market share.
5. price can be increased up to certain level considering the competition level,price elasticity of demand etc. consumers are often ready to pay more for better quality goods.

to rebuilt the image may take some time but if above steps and proper marketing techniques are undertaken then in long run the company can recover all the losses and additional costs and can get the increased profitability and market share side by side.