Ketchup Case
Running Head: ECONOMIC FORECAST
Economic Forecast
Meritus University
Economic Forecast The economic forecast for Heinz Ketchup will cover different factors that lead to the demand for ketchup and factors that lead to a change in the cost of production. The forecast will also show what economic indicators, Heinz, can continually review, to predict how demand for ketchup will change. This forecast will also help to show what the next two years should be like for these economic indicators. This paper will also show the confidence that Heinz can have in these indicators and finally will show the implications of the economic forecast and price elasticity from the pricing structure.
Factors
Heinz must look at several different factors …show more content…
A popular topping for these products is ketchup, so it is reasonable to assume that demand for ketchup would also increase with a decrease in the price for hamburgers and hot dogs. Another factor that will lead to a change in demand of ketchup is the price of a substitute product, such as, mustard or mayonnaise. If the price for one of these products is reduced then consumers may opt for these products over ketchup. The final factor that Heinz should monitor to help predict a change in the demand of ketchup is consumer spending. If consumer spending decreases, then consumers may choose an inferior brand that is sold at a cheaper price over the Heinz brand. Heinz must also be aware of the cost of tomatoes, as this is the prime ingredient for ketchup. A change in price of tomatoes will cause a change in the cost of producing ketchup. A shortage in the supply of tomatoes could cause a spike in its cost that would increase the cost of producing ketchup.
Economic …show more content…
With the sample size of the consumer confidence index small, this indicator may not reflect the true confidence of spending and therefore cannot rely too much on this indicator. The CPI is expected to remain stagnant over the next year (2010). With prices remaining relatively unchanged, Heinz can expect not much change in the demand for ketchup in the near future based on this indicator.
Implications
With CPI expected to remain relatively unchanged, Heinz can continue with its current pricing structure. With dominance in the market, Heinz can expect demand of its product to remain unchanged. Heinz ketchup would be considered price inelastic and therefore can expect to have similar sales volume over the next several years with how the economic indicators are forecasted to remain stagnant.
Conclusion
Heinz must monitor change in compliment goods, such as hamburgers and hot dogs, and substitute goods to help gauge how demand may shift for ketchup. The economic indicators that can help toward this are the CCI and CPI indexes. With future outlook remaining stagnant, Heinz can expect the demand for its product to remain relatively
Economic Forecast
Meritus University
Economic Forecast The economic forecast for Heinz Ketchup will cover different factors that lead to the demand for ketchup and factors that lead to a change in the cost of production. The forecast will also show what economic indicators, Heinz, can continually review, to predict how demand for ketchup will change. This forecast will also help to show what the next two years should be like for these economic indicators. This paper will also show the confidence that Heinz can have in these indicators and finally will show the implications of the economic forecast and price elasticity from the pricing structure.
Factors
Heinz must look at several different factors …show more content…
A popular topping for these products is ketchup, so it is reasonable to assume that demand for ketchup would also increase with a decrease in the price for hamburgers and hot dogs. Another factor that will lead to a change in demand of ketchup is the price of a substitute product, such as, mustard or mayonnaise. If the price for one of these products is reduced then consumers may opt for these products over ketchup. The final factor that Heinz should monitor to help predict a change in the demand of ketchup is consumer spending. If consumer spending decreases, then consumers may choose an inferior brand that is sold at a cheaper price over the Heinz brand. Heinz must also be aware of the cost of tomatoes, as this is the prime ingredient for ketchup. A change in price of tomatoes will cause a change in the cost of producing ketchup. A shortage in the supply of tomatoes could cause a spike in its cost that would increase the cost of producing ketchup.
Economic …show more content…
With the sample size of the consumer confidence index small, this indicator may not reflect the true confidence of spending and therefore cannot rely too much on this indicator. The CPI is expected to remain stagnant over the next year (2010). With prices remaining relatively unchanged, Heinz can expect not much change in the demand for ketchup in the near future based on this indicator.
Implications
With CPI expected to remain relatively unchanged, Heinz can continue with its current pricing structure. With dominance in the market, Heinz can expect demand of its product to remain unchanged. Heinz ketchup would be considered price inelastic and therefore can expect to have similar sales volume over the next several years with how the economic indicators are forecasted to remain stagnant.
Conclusion
Heinz must monitor change in compliment goods, such as hamburgers and hot dogs, and substitute goods to help gauge how demand may shift for ketchup. The economic indicators that can help toward this are the CCI and CPI indexes. With future outlook remaining stagnant, Heinz can expect the demand for its product to remain relatively