Wholesome Pet Food has successfully specialized for 20 years in high-quality pet food made from all-natural ingredients and organically raised lamb. This brand has a strong following and is recommended by veterinarians who practice in affluent neighborhoods. If Wholesome's main supplier of lamb announces that the price for lamb will be 15 percent higher next year, which of the following is most likely? a. Companies pursuing Wholesome's business strategy are especially vulnerable to this risk. b. Wholesome will probably be able to pass the cost on to its customers because they are less sensitive to price increases than the average buyer. c. If Wholesome raises its pet food prices, customers will turn to less expensive brands such as Purina. d. Wholesome probably operates on very thin margins, and a cost increase will threaten its ability to earn average returns.

b. Wholesome will probably be able to pass the cost on to its customers because they are less sensitive to price increases than the average buyer

Explanation:

Wholesome sells high quality, organic natural pet food. Commodities like that are known to be quite expensive to the average buyer. We are also told that veterinarians in AFFLUENT NEIGHBORHOODS recommend Wholesome products and it has a HIGH FOLLOWING.

Logically speaking then Wholesome sells at a high price and yet their high price does not deter sales meaning that their customers are LESS price sensitive. They care more about the quality.

Should Wholesome increase the price of its foods because of the lamb increase, they can simply pass it on to their customers who are more interested in quality than price.

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