a.Knowing that price competition is very fierce in this market, is firms’ choices of maximumdifferentiation optimal? b.Imagine that entry in this market became easy and, as a consequence, many firms enteredwith ice creams with intermediate levels of smoothness between Ben&Jerry’s and Haagen-Dazs.How could you represent this situation and how will it affect prices and profits as more firmsentered? How would you expect the level of advertising to change ifentry took place in this market.b. Both firms advertise heavily to consumers. What do you think that is the effect of advertisingon competition in this market? Based on what you know about this market and the type of product, which type of advertisingwould you expect the firms to mostly engage in? The market for superpremium ice creams is dominated by Ben&Jerry's and Haagen-Dazs, whichcompete with non-overlapping flavors and a "chunky" vs. "smooth" concept, depending on thepresence of mix-ins (mix-ins are extra ingredients like chocolate, caramel, candy, and baked goodsthat have been added to the ice cream). Using a unit segment to represent smoothness of the icecream, Haagen-Dazs (A) produces perfectly smooth flavors (i.e. is located at 0), while Ben&Jerry's(B) produces perfectly chunky flavors (i.e. is located at 1).Ice cream consumers differ in their preference for smoothness and are uniformly distributed alongthe segment. Each consumer has a disutility (in addition to the price) from departing from theirfavorite smoothness, equal to a unit transport cost of t = 2.Both firms have the same marginal cost c = 10 and no fixed costs.

Ans1) Talking About the differentiation then, it will help the organisation to grow at a large…

Answered: s a consequence, many firms entered…

Principles Of Marketing

17th Edition

ISBN:9780134492513

Author:Kotler, Philip, Armstrong, Gary (gary M.)

Publisher:Kotler, Philip, Armstrong, Gary (gary M.)

Chapter1: Marketing: Creating Customer Value And Engagement

Section: Chapter Questions

Problem 1.1DQ

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Related questions

Question

Knowing that price competition is very fierce in this market, is firms’ choices of maximum
differentiation optimal?

Imagine that entry in this market became easy and, as a consequence, many firms entered
with ice creams with intermediate levels of smoothness between Ben&Jerry’s and Haagen-Dazs.
How could you represent this situation and how will it affect prices and profits as more firms
entered? How would you expect the level of advertising to change if
entry took place in this market.
b. Both firms advertise heavily to consumers. What do you think that is the effect of advertising
on competition in this market? Based on what you know about this market and the type of product, which type of advertising

would you expect the firms to mostly engage in?