Sophie's Doll House sells its most popular doll for $25. It has just learned that its leading competitor is mass producing an excellent copy and plans to flood the market with their $10 doll in six weeks. What should Sophie's Doll House do?

Question

Quizplus · Accepted Answer

By increasing the supply of their doll now, Sophie's Doll House can build up a reserve of customers before the cheaper imitation doll hits the market. This will establish customer loyalty and make it less likely that they will choose to switch to the competitor's doll later. It also allows them to capitalize on the market before the competitor enters, potentially gaining a larger portion of the market share.

Sophie's Doll House Sells Its Most Popular Doll for $25