The to go up, I would increase advertising $100

The elasticity calculation is – 0.443
and because the results of the elasticity of demand is

less
than one it makes this inelastic. I think that the strategy for this demand
would be set up

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something
short or long term which would be to increase the price of the product by about
50 cents and this would only change the price to $2.50. The reasoning behind this
would be because by increasing the price, the product would still be cheaper
than the price of the competitors, and our company would see greater profits
(total revenue increased generated). The consumer would still purchase the
product because it is inelastic and it a product that is needed to the increase
in price would be reasonable and would not cause any harm to the business.

According to the
article posted on Launch House it states “With consumers spending the majority
of their online time on social media sites, online media marketing has been an
effective way for small businesses to enhance their customer relations and
broaden their consumer based without hurting their bank account” (Launch,
House, 2012). The elasticity of advertising calculations is +.2129. The
elasticity results for advertising is a figure that is positive, and if there
were to be an increase in the advertising figures then there will be results
that are positive on the quantity demanded. I think that the strategy that
could be used for a short time would be to increase each month the amounts
because the more money that is spent on advertising this will have a great
impact on sales which will be recognized by the company compared to the
products of the competitors. Now all things considered that the sales of the
product continue to go up, I would increase advertising $100 each month. Once
the products have gained the high popularity that we want, then there would be
no need to continue with the increase on the advertising costs. Once arrived at
this 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 way
to cut down costs of the price advertising however at the same time increased
knowledge about the products which is public awareness.

            The leading competitors’ product is
the same as cross elasticity results are 0.1663. This elasticity measures how
the consumers respond of the quantity demanded of the good to change in price
of another good. We have positive results and when the price goes up on one
product, the quantity demanded on the other product will increase also. Now our
product and the other company’s product can sometimes be considered products
that are substitutes. To me there is no real methods to be considered to reach
a specific goal because it does not matter if the demand of our product because
if it rises up the effects are going to be positive and the end is going to be
positive with the product of the competitor as well. The approach that seems to
be the best is increasing the companies’ revues in the price we have and the
amount of advertising the company decides to put in.

            The elasticity calculation per
capita income is 1.1086. Because this value of elasticity is greater than zero
it 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 little
more these are products where the consumers’ satisfaction is derived from the
good and the service itself and the opinions of other consumers. This is still
a normal good and I think that the average person or family will buy our
microwable product. There is a strategy which would be short term for this and
it would be to increase the price a little so that the average consumer is not
turned away by the price increase because that would be drastic. This would
still cause them to want to purchase the item because it would still be
considered to be within the consumers’ average price range. If the price were
going to be increased drastically by 4 or 5 dollars, than I could definitely
see that as being too costly for the consumer which would make it too expensive
and the results of this would reduce the amount of profit and sales of this
microwable product.

            My overall thoughts on the
elasticity’s are that the company should cut the prices as a whole in order to
increase the market share. The microwable product is inelastic and it is
considered 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 of
the best ways to increase market share is through advertising. Coupon offering,
social media advertising, and maybe offering specials for a short period of
time are just a few ways that advertising can help increase the market share.
Thom Reece explains how coupons are beneficial to increase profits and product
awareness, coupons can entice new consumers that have been shopping at certain
competitors. “It has been a proven fact that consumers will break their routine
patterns 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 big
factors that help with increasing the market share which helps to generate
revenue for the company.

            SUPPLY AND DEMAND

            There are important factors that
influence supply and demand and they are the prices of the competitors and the
techniques and quality of the advertising used. There may be other brands that
are leading and they may be similar and cheaper. This would have a huge impact
on our microwable merchandise supply and demand. Another impact on supply and
demand that could be negative is if the competitors start offering better
products along with quality and selection of the merchandise. David Garvin
states that a product that has better quality characteristics is more wanted by
consumers, “A product that maximizes satisfaction is certainly preferable to
one that meets fewer needs” (Garvin, 1984). If there is less profit for our
merchandise than that means that the demand is low for our merchandise and this
will certainly effect how and if we are able to supply our frozen merchandise
to the customers. If competitors marketing and advertising strategies are
better than ours then the consumer would also be willing to get the product
from our competitors instead of us. The strategies of pricing, techniques of
advertising, and how consumers view the competitors in the world of buying and
selling can have an impact that is major which can cause a shift in the supply
and demand curves on the equilibrium graph.

 

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