PRICE ELASTICITY DEMAND

?
  • Created by: _Holly98
  • Created on: 15-12-15 11:51

PED

MEASURES RESPONSIVNESS OF DEMAND TO CHANGE IN PRICE

PRICE INCREASES - DEMAND DECREASES

1 of 7

PED

PRICE INCREASES DEMAND DECREAESSE

BY WHAT PROPORTION

COMPARES % CHANGE IN DEMAND BIGGER OR SMALLER THAN % CHANGE IN PRICE

RESULTING ANSWER VALUE

ALWAYS NEGATIVE 

BIGGER VALUE PED BIGGER CHANGE DEMAND 

PED OF 2 MEANS % CHANGE IN DEMAND IS TWICE AS MUCH AS IN PRICE 

2 of 7

FORMULAS

DIFFERENCE / ORIGINAL X 100 = % CHANGE

PED

% CHANGE QUANTITY / % CHANGE PRICE

3 of 7

ELASTIC & INELASTIC

ELASTIC = PED GREATED 1 

DEMAND RESPONSIVE CHANGE IN PRICE

INELASTIC = PED LESS 2

DEMAND UNRESPONSUVE CHANGE PRICE 

4 of 7

DETERMINES ACTUAL PED

EXACT PED VARIOUS FACTORS

TIME

ALTERNATIVES

LUXURIES / NECESSITIES

BRAND LOYALTY / USPS/ DIFFERENTIATION 

LOW PROPORTION DISPOSABL EINCOME VS HIGH PROPORTION 

5 of 7

PED MATTER?

FIRMS PREDICT PRICE CHANGE AFFECT SALES & REVENUE

IMPORTANT MARKETING PLANNING 

PREDICT IMPACT ON STOCKS 

6 of 7

PROBLEMS PED

UNRELIABLE - HARD CALUCLATE / ONLY ESTIMATE / ASSUME ONLY PRICE CHANGES

PRICE CUTS PROVOKE COMPETITIVE REACTION 

OTHERTHINGS MAY CHANGE: CONSUMERS TASTES / TECHNOLOGY / LEGISLATION / ECONOMY / COMPETITORS 

CONSUMERS REACT DIFFERENCLY PRICE INCREASES THAN DECREASES 

7 of 7

Comments

No comments have yet been made

Similar Business resources:

See all Business resources »See all MARKETING resources »