Engro Foods (Pvt) Ltd. is a FMCG manufacturer in Pakistan. Its main products are milk, icecream, and flavored juices. Last year the company has sold around 8 million units of milk, 5 million units of ice-cream and 3 million units of flavored juices. The average current market price of the milk is Rs.100; the ice-cream is 60; and the Juices is Rs.40. In an attempt to improve revenue, the managers of the company have decided to increase all prices by 5%. Market research has suggested that the price elasticity of demand for each product is: Milk: (-) 1.5; Ice-cream: (-) 1.0; Flavored juices: (-) 0.5 You are required to calculate, evaluate and suggest the planned price change on following situations. a. Would a 5% price increase have been better for some or all of the products? b. Would a 5% price reduction have been better for some or all of the products? c. Should the company retain their current market price? If yes then why? If not then why not? d. How Engro Foods (Pvt) Ltd. can maximize their revenue?
Engro Foods (Pvt) Ltd. is a FMCG manufacturer in Pakistan. Its main products are milk, icecream, and flavored juices. Last year the company has sold around 8 million units of milk, 5
million units of ice-cream and 3 million units of flavored juices. The average current market
price of the milk is Rs.100; the ice-cream is 60; and the Juices is Rs.40.
In an attempt to improve revenue, the managers of the company have decided to increase all
prices by 5%.
product is: Milk: (-) 1.5; Ice-cream: (-) 1.0; Flavored juices: (-) 0.5
You are required to calculate, evaluate and suggest the planned price change on following
situations.
a. Would a 5% price increase have been better for some or all of the products?
b. Would a 5% price reduction have been better for some or all of the products?
c. Should the company retain their current market price? If yes then why? If not then
why not?
d. How Engro Foods (Pvt) Ltd. can maximize their revenue?
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