Question

In reaction to the loss of their third largest customer, the Chattanooga Ice Cream division's head of sales recommended that the company...

		decrease expenses by reducing flavors and inventories.
		increase spending on promotional allowances to "buy back" the shelf space.
		freeze salaries for a year and eliminate cost-of-living increases in retiree's benefits.
		increase excitement of product line with new flavors and mix-ins.

Answer 1

Correct answer is increase excitement of product line with new flavors and mix-ins.

Reason: increasing excitement of product line may attract some new customers to it

Other options evaluation:

decrease expenses by reducing flavors and inventories.:

Reducing flavors and inventories may have negative impact and may causing loosing some more competitors

increase spending on promotional allowances to "buy back" the shelf space.

This does not gain any incremental benefit to improve Chattanooga's image or gain sales

freeze salaries for a year and eliminate cost-of-living increases in retiree's benefits

This would have negative impact on employee morale and should be avoided