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Advertising and price elasticity
Advertising and price elasticity - Trends
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Very often, a change in the price of one product leads to a change in the demand for another, economists call this the cross-price effect and this is the focus of this chapter. Cross price elasticity (CPed) measures the responsiveness of demand for good X following a change in the price of good Y (a related good). We are mainly concerned here with the effect that changes in relative prices within a market have on the pattern of demand. With cross price elasticity we make an important distinction between substitute products and complementary goods and services Substitutes: With substitute goods such as brands of cereal or ...
It boils down to choice. Price is a matter of choice. More choice tends to make consumers more sensitive to price. The jargon is elastic, meaning that if the price goes up a little then the demand will go down a lot. This is due to the value that consumers perceive - the maximum price they are willing to pay. One of the core drivers of any brand's profitability is the price it can set for what it sells. Marketers want to know how much volume they can sell at different price points, so they can figure out what price point is best for their product. There are levers that can be pulled ... Read More
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Paul Solman - elasticity pt1
Price Elasticity of Supply
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