Gamma Food Products competes in the "center-of-the-aisle" packaged foods business. Ever since its founding and membership in the industry, the company has focused on gaining market share. In 2017, it had, by far, the largest market share in the industry and used this advantage to create order and discipline in the industry, particularly in terms of prices. Starting in late 2016, Gamma Food Products' VP of Marketing, Polly Kundig noticed the heads of Gamma's four largest competitors were meeting often surreptitiously, particularly at trade shows. Parallelly, Kundig also noticed that the four firms were pricing their products at around the same level and distinct from the prices of others, including Gamma. In addition, when one of the four made a move in pricing or capacity planning, the others made quick responses.
-Gamma Food Products' industry is facing intense competition and both tacit and explicit collusion.Since price is the primary basis of competition in the packaged foods industry,it is recommended that Gamma Food Products invest proactively in ________ signals.

Question

Gamma Food Products competes in the "center-of-the-aisle" packaged foods business. Ever since its founding and membership in the industry, the company has focused on gaining market share. In 2017, it had, by far, the largest market share in the industry and used this advantage to create order and discipline in the industry, particularly in terms of prices. Starting in late 2016, Gamma Food Products' VP of Marketing, Polly Kundig noticed the heads of Gamma's four largest competitors were meeting often surreptitiously, particularly at trade shows. Parallelly, Kundig also noticed that the four firms were pricing their products at around the same level and distinct from the prices of others, including Gamma. In addition, when one of the four made a move in pricing or capacity planning, the others made quick responses. 
-Gamma Food Products' industry is facing intense competition and both tacit and explicit collusion.Since price is the primary basis of competition in the packaged foods industry,it is recommended that Gamma Food Products invest proactively in ________ signals.

Quizplus · Accepted Answer

Soft signals in this context refer to non-aggressive, cooperative gestures or actions that indicate a willingness to maintain a stable and predictable market environment. Given the situation where competitors are possibly engaging in tacit collusion, showing aggressive or tough signals could escalate into a price war, which Gamma Food Products likely wants to avoid. Soft signals can help in maintaining order and discipline in pricing within the industry without resorting to explicit collusion, which is illegal.

Gamma Food Products Competes in the "Center-Of-The-Aisle" Packaged Foods Business