The demand for Crunchy chips in the junk food market segment was about to reach saturation point. A majority of the retailers wanted to stock Crunchy chips. Great Foods Inc., the manufacturer of Crunchy chips, also manufactured rose flavored milk that was not doing well in the market. In order to maximize the sales of the rose flavored milk, Great Foods Inc. entered into an agreement with a group retailers stating that for every two packets of Crunchy chips, they would have to stock one bottle of the rose flavored milk. It can be said that, Great Foods Inc. entered into a(n) _____ with the retailers.

Question

Quizplus · Accepted Answer

Great Foods Inc. entered into a tying contract with the retailers, where they tied the sale of one product (rose flavored milk) to the sale of another (Crunchy chips). This is a common strategy used to increase the sales of a less popular product by leveraging the demand for a more popular product.

The Demand for Crunchy Chips in the Junk Food Market