The elasticity calculation is – 0.
443and because the results of the elasticity of demand is lessthan one it makes this inelastic. I think that the strategy for this demandwould be set up somethingshort or long term which would be to increase the price of the product by about50 cents and this would only change the price to $2.50. The reasoning behind thiswould be because by increasing the price, the product would still be cheaperthan the price of the competitors, and our company would see greater profits(total revenue increased generated). The consumer would still purchase theproduct because it is inelastic and it a product that is needed to the increasein price would be reasonable and would not cause any harm to the business.
- Thesis Statement
- Structure and Outline
- Voice and Grammar
According to thearticle posted on Launch House it states “With consumers spending the majorityof their online time on social media sites, online media marketing has been aneffective way for small businesses to enhance their customer relations andbroaden their consumer based without hurting their bank account” (Launch,House, 2012). The elasticity of advertising calculations is +.2129. Theelasticity results for advertising is a figure that is positive, and if therewere to be an increase in the advertising figures then there will be resultsthat are positive on the quantity demanded.
I think that the strategy thatcould be used for a short time would be to increase each month the amountsbecause the more money that is spent on advertising this will have a greatimpact on sales which will be recognized by the company compared to theproducts of the competitors. Now all things considered that the sales of theproduct continue to go up, I would increase advertising $100 each month. Oncethe products have gained the high popularity that we want, then there would beno need to continue with the increase on the advertising costs. Once arrived atthis point then this would mean that the advertising costs would be reduced.Also by using social media as a form for advertising, this is a very good wayto cut down costs of the price advertising however at the same time increasedknowledge about the products which is public awareness. The leading competitors’ product isthe same as cross elasticity results are 0.1663.
This elasticity measures howthe consumers respond of the quantity demanded of the good to change in priceof another good. We have positive results and when the price goes up on oneproduct, the quantity demanded on the other product will increase also. Now ourproduct and the other company’s product can sometimes be considered productsthat are substitutes. To me there is no real methods to be considered to reacha specific goal because it does not matter if the demand of our product becauseif it rises up the effects are going to be positive and the end is going to bepositive with the product of the competitor as well.
The approach that seems tobe the best is increasing the companies’ revues in the price we have and theamount of advertising the company decides to put in. The elasticity calculation percapita income is 1.1086.
Because this value of elasticity is greater than zeroit is intended as good that is normal. Now the elasticity is greater than one,this can also be considered a luxury good. Because the demand rises a littlemore these are products where the consumers’ satisfaction is derived from thegood and the service itself and the opinions of other consumers. This is stilla normal good and I think that the average person or family will buy ourmicrowable product. There is a strategy which would be short term for this andit would be to increase the price a little so that the average consumer is notturned away by the price increase because that would be drastic. This wouldstill cause them to want to purchase the item because it would still beconsidered to be within the consumers’ average price range. If the price weregoing to be increased drastically by 4 or 5 dollars, than I could definitelysee that as being too costly for the consumer which would make it too expensiveand the results of this would reduce the amount of profit and sales of thismicrowable product. My overall thoughts on theelasticity’s are that the company should cut the prices as a whole in order toincrease the market share.
The microwable product is inelastic and it isconsidered to be a good that is both necessary and luxury. Both income classes,low and middle, these consumers are going to purchase our product, and one ofthe best ways to increase market share is through advertising. Coupon offering,social media advertising, and maybe offering specials for a short period oftime are just a few ways that advertising can help increase the market share.Thom Reece explains how coupons are beneficial to increase profits and productawareness, coupons can entice new consumers that have been shopping at certaincompetitors. “It has been a proven fact that consumers will break their routinepatterns of shopping in order to take advantage of the offer of good coupons”(Reese, 2005). Advertising on television and the radio are just a few bigfactors that help with increasing the market share which helps to generaterevenue for the company. SUPPLY AND DEMAND There are important factors thatinfluence supply and demand and they are the prices of the competitors and thetechniques and quality of the advertising used.
There may be other brands thatare leading and they may be similar and cheaper. This would have a huge impacton our microwable merchandise supply and demand. Another impact on supply anddemand that could be negative is if the competitors start offering betterproducts along with quality and selection of the merchandise. David Garvinstates that a product that has better quality characteristics is more wanted byconsumers, “A product that maximizes satisfaction is certainly preferable toone that meets fewer needs” (Garvin, 1984).
If there is less profit for ourmerchandise than that means that the demand is low for our merchandise and thiswill certainly effect how and if we are able to supply our frozen merchandiseto the customers. If competitors marketing and advertising strategies arebetter than ours then the consumer would also be willing to get the productfrom our competitors instead of us. The strategies of pricing, techniques ofadvertising, and how consumers view the competitors in the world of buying andselling can have an impact that is major which can cause a shift in the supplyand demand curves on the equilibrium graph.