How Could Demand Elasticity Lead To Pricing Decisions?

How Could Demand Elasticity Lead To Pricing Decisions? How Could the Knowledge of Demand Elasticity Lead to Make Pricing Decisions? Making pricing decisions Price sensitivity is not just about charging high prices to maximize revenue. It might also relate to cut prices sometimes dramatically to encourage people who may otherwise not be part of the market to use the services or goods being provided. In business, it is like business of education, learning of price elasticity of demand. This concept is a cornerstone in any discussion of microeconomic principles and pricing for marketing effectiveness. Practically, price elasticity of demand involves the idea that consumers are affected by manipulations of price. On the producer part of view, price represents a distinct reflection of the production and marketing costs incorporated in bringing the product to the marketplace as well as the beginning point in the calculation of revenue and profit. On the consumer part, price is a critical ingredient in the image and value-conceptualization of a product. Elasticity of demand is dependent on the knowledge of the determinants of demand and helps firms and policy makers plan of consumer behavior in the market place. Products that can be replaced are likely to have a positive cross price elasticity of demand because the change in price makes them relatively more or less expensive in relation to each other. Similarly co-relative goods will give rise to a cross price elasticity of demand value that is negative. Strategic pricing  clarifies the relationship between market segmentation and price, and delivers the tools your organization needs to stay focused on value as you determine break-even, define price elasticity, and analyze tradeoffs between features and price points. Using strategic pricing tools yields is a better positioning approach. What I want to bring out here is a company director isnt only concern about calculating numbers profits. The number is a meaning at the end; when taking about price elasticity of demand it is used to see how sensitive the demand for a product is to a price change. The higher the price elasticity, the more sensitive consumers are to price changes. The very high price elasticity suggests that when the price of a product goes up, consumers will buy a great deal less of it and when the price of that good goes down, consumers will buy a great deal more. The very low price elasticity infers the opposite, that changes in price have little influence on demand. When measuring elasticity, what is being measured is the responsiveness to demand to its determinants, such as income and other goods. This gives rise to income elasticity of demand and cross price elasticity of demand. Income elasticity measures the responsiveness of demand to a change in income. Cross price elasticity of demand measures the responsiveness of quantity demanded to a change in price of another good. Demand elasticity of make pricing decision will define how the market will react to changes in price. Understanding of this will allow companies to make informed decisions on how should approach the final sale of the good which is achieved through marketing. Background Historically elasticity of demand thinking has been primarily applied to the marketing mix variable of price. However, the concept can also lend meaningful insights into the administration of the other marketing mix and environmental variables in a context of causality. There exists a rich body of literature exploring the more extensive uses of elasticity of demand. However, basic marketing texts, and presumably introductory classes, typically do not feature the wider applications of the tool. At the beginning of 20 century, economist started to found out that demand consisted of more than simple purchasing power. It reverberate desire as well as ability to purchase, and new experiences with advertising and salesmanship were proving that desire could be increased and carved by factors other than the existence of supply. An extra idea of the market concerned its capacity to adjust itself automatically to an amicable balance. It had long been held that competitive forces would normally, in the long run, dissipate tendencies of unbalance, but as competition decreased in some industries and trades, the assumptions found in traditional economic theory became increasingly invalid. A third idea was that cost was the principal determinant of price, at least in the long run. Concepts of the elasticity of demand were still another influence upon the thinking of early marketing theory. Alfred Marshals concept of elasticity of demand has long been used by marketing writers as a theore tical basis for selling, advertising and the promotional work of marketing in general. (Fig 1. Price Elasticity of Demand (PED) It was devised by Alfred Marshall.) Content Price elasticity of demand is defined as the measure of responsiveness in the quantity demanded for products as a result of change in price of the same products. To say it in another way, its percentage change in quantity demanded as per the percentage change in price of the same products. In economics and in business, the price elasticity of demand is a measure of the sensitivity of quantity demanded to changes in price. It is measured as elasticity, which it is measures the relationship as the ratio of percentage changes between quantities demanded of a good and changes in its price. A price fall usually results in an increase in the quantity demanded by consumers. The demand for a good is relatively inelastic when the change in quantity demanded is less than change in price. Goods and services for which no substitutes exist are generally inelastic. Marketing strategy focus on the decisions marketers make to help the company satisfy its target market and achieve its objectives. Price, of course, is one of the key marketing mix decisions and due to all marketing decisions must work together; the final price will be impacted by how other marketing decisions are made. Every companies view price as a key selling feature, but some firms, for example those seeking to be viewed as market leaders in product quality, will de-emphasize price and concentrate on a strategy that highlights non-price benefits e.g. quality, durability, service, etc. Such non-price competition can help the company avoid potential price wars that often break out between competitive firms that follow a market share objective and use price as a key selling feature. Understanding how price changes impact the market requires the marketer have a firm understanding of the concept economists call elasticity of demand, which relates to how purchase quantity changes as prices change. Elasticity is evaluated under the assumption that no other changes are being made and only price is adjusted. The logic is to see how price by itself will affect overall demand. Obviously, the chance of nothing else changing in the market but the price of one product is often unrealistic. For example, competitors may react to the marketers price change by changing the price on their product. Despite this, elasticity analysis does serve as a useful tool for estimating market reaction therefore it leads to make pricing decisions. Price elasticity of demand elasticity plays an important part when it needs to make piecing decision Marketing Essentials: economics knowledge to pricing from a marketing perspective (supply, demand, price elasticity). And the knowledge of income elasticity of demand for different products helps firms predict the effect of a business cycle on sales as well. All countries experience a business cycle where actual GDP moves up and down in a regular pattern causing booms and slowdowns or even a recession. The business cycle means incomes rise and fall. Elasticity deals with three types of demand scenarios: (1) Elastic Demand, (2) Inelastic Demand and (3) Unitary Demand. For marketers the important issue with elasticity of demand is to understand how it impacts company revenue. Strategic Pricing  define the relationship between market segmentation and price, and delivers the tools to the organization needs to stay adjusted on value as determine break-even, define price elasticity, and analyze tradeoffs between features and price points. Using strategic pricing tools yields a better positioning approach. Opportunity cost is the cost expressed in terms of the next best alternative sacrificed. Opportunity cost is central to the whole study of both economics and business as it is at the heart of the decision making that characterizes the essence of both subject disciplines. Value helps to explain why the demand curve slopes downwards from left to right. At higher prices, consumers have to sacrifice more utility (the satisfaction gained) from consuming other products. For some in a market, the price they are being asked to pay does not represent value for money in other words they recognize that the sacrifice of other goods and services they have to make represents a negative impact on their utility. This is all very theoretical but it is what we do when we make decisions about spending every day. Elasticity varies among products because some products may be more essential to the consumer. Products that are necessities are more insensitive to price changes because consumers would continue buying these products despite price increases. Conversely, a price increase of a good or service that is considered less of a necessity will deter more consumers because the opportunity cost of buying the product will become too high. Price elasticity of demand is defined as the measure of responsiveness in the quantity demanded for a commodity as a result of change in price of the same commodity. In other words, it is percentage change in quantity demanded as per the percentage change in price of the same commodity. In economics and business studies, the price elasticity of demand (PED) is a measure of the sensitivity of quantity demanded to changes in price. It is measured as elasticity, which is it measures the relationship as the ratio of percentage changes between quantity demanded of a good and changes in its price. A price drop usually results in an increase in the quantity demanded by consumers. The demand for a good is relatively inelastic when the change in quantity demanded is less than change in price. Goods and services for which no substitutes exist are generally inelastic. Demand for an antibiotic, for example, becomes highly inelastic when it alone can kill an infection resistant to all other antibiotics. Rather than die of an infection, patients will generally be willing to pay whatever is necessary to acquire enough of the antibiotic to kill the infection. The primary objective of a business is to provide quality products and services to customers, and through this to make a profit as a strongly related objectives measure. Many organizations fail to make an appropriate profit because they do not know how to price their products or services. Pricing is the critical element in achieving a profit and is a factor that all firms should seek to control. In order to set prices appropriately, a firm must understand their products, the market for these, production and distribution costs, and the competition. Especially with the growth of the Internet and electronic commerce networks, the marketplace responds very rapidly to technological advances and international competition. Thus, the need to be continually sensitive to the many factors that affect pricing, and to be ready to adjust organizational behavior appropriately, is greater than ever. Here, we present a literature review and overview of this important subject and related pricing decis ion support issues. Conclusion In my opinion, the theory behind price sensitivity is based on an understanding of the aims of an organization and the concepts of price elasticity of demand and consumer surplus. Most private sector business organizations will need to make a profit to survive. This may not translate to a profit maximizing approach but nevertheless they will be looking to generate profits from activities. Part of this process will be looking at what happens to revenue. Revenue is the amount received from the sale of goods and services and is found by multiplying the price of a product by the quantity sold. Price has an important function in markets. It acts as a signal to both producers and consumers. For producers it gives them some indication about the returns they can expect from sales in relation to their costs in other words whether it is worth producing a good or not. For consumers it provides an indication about value. Value is a very important concept in economics and business. It is difficult to define because we all have a different interpretation of what value means. In essence, the value we place on a good or service is indicated by the price we are willing to pay to consume that good or service. Price sensitivity therefore is important to all businesses when considering their pricing strategies. They will need to have some understanding of how their market will react to changes in price and thus what the impact is on their revenue. Understanding of this will allow companies to make informed decisions on how should approach the final sale of the good which is achieved through marketing.

Crime News Analysis Essay -- Communication, Media, Newspaper

Introduction In this crime news analysis I will be focusing on the right wing tabloid newspaper ‘The Sun’ and the left wing broadsheet ‘The Guardian.’ I will be analysing the article of the student riots in both newspapers, and seeing whether there are similarities or differences in the way in which the event is presented. The incident occurred when a demonstration against higher tuitions fees got out of hand whereby some protesters used violent tactics to voice their opinions. Quantitative and Qualitative Within a news article, the qualitative aspect is usually the images and the quantitative is the amount of text used. Quantitative data is usually seen as more favourable and it is common within broadsheets like ‘The Guardian,’ whereas tabloids such as ‘The Sun’ tend to use more qualitative data (Ericson et al, 1991). Tabloids usually target the working class who are stereotypically deemed to be less educated, therefore using numerous pictures almost makes it equivalent to a child’s story book, whereas ‘The Guardian’ is richer in text and aimed at the middle class thus has more of a debate (Schlesinger et all, 1991) . ‘The Sun’ uses 3 pages, has 8 images and uses about 20% of text. Whereas, ‘The Guardian’ uses 5 pages, 3 images and has about 65% as text. The journalist tend to be specific on what they believe make an article appealed to their readers. News value There are many criminal events that occur every day, however only a few are selected as they are deemed to be newsworthy. Chibnall (1977) claimed that a story is classed as newsworthy if it is dramatized, immediate and involves structured access. ‘The Sun’ could be seen to use all these elements, for example they over emphasize on the violence that occurred and ... ...labelled them as such (Hayward, 2006). In this case, if the label is accepted there could be more protests and riots because the individuals may believe that this is the quickest way to get the message across, UKUncuts activist also claimed within ‘The Guardian’ that ‘more high profiled campaigns could be expected’. Conclusion Overall, it is clear that there is a contrast between both of the newspapers. It could be argued that the production of newspapers is mainly to fulfil the readers expectations, for example, the readers of ‘The Sun’ expect to read a dramatic story which is why the editors select specific words and images, whereas the ‘The Guardian’ readers may prefer more of an intellectual debate (Schlesinger et all, 2010). They both tell the same story but in different ways, consequently it is up to the reader to decide which they believe or prefer.

Cannon

Select a company you believe to be innovative (this should be an internationally known company). Explain what makes this company innovative? In your answer, use relevant theory and examples to illustrate why you believe the company is innovative. Cannon – an innovative company Founded in 1937 with the specific goal of making the best quality camera available to customers, Canon’s passion for the power of image has since extended its technology into many other markets and has established it as a world leader in both consumer and business imaging solutions. Its solutions comprise products, ranging from digital compact and SLR cameras, through broadcast lenses and portable X-ray machines, to multi-function and production printers, all supported by a range of value added services. Canon invests heavily in R&D to deliver the richest and most innovative products and services to satisfy customers’ creative needs. In my essay I will show that through disruptive, strategic and product innovation Canon remains the leader in the market of all its products. Canon has proved that disruptive innovation brings many benefits to businesses. Christensen and Raynor (Christensen and Raynor, 2003) justify that new entrant firms will win with leading firms of an industry through disruptive innovation, by commercializing a simpler, more convenient product that sells for less money and appeals to new or unattractive customer set. Canon has proved that the best way for an upstart company to attack established competitors is to disrupt them. Disruptive innovations do not attempt to bring better products to established customers in existing markets. Rather, they disrupt and redefine that trajectory by introducing products and services that are not as good as currently available products. Still, disruptive technologies offer other benefits – typically, they are simpler, more convenient, and less expensive products that appeal to new or less-demanding customers (Todd and Bessant, 2009). Once the disruptive product gains a share in the new or low-end markets, the improvement cycle begins. In addition, the pace of technological process exceeds customers’ ability to use it; the previously not good enough technology eventually improves to intersect with the needs of the more demanding customers. When that happens, the disruptors are on the path that will ultimately beat the incumbents. Throughout Canon’s history, the company has used disruptive innovation in order to gain market share. In 1982 Canon developed the first personal copier. It gained its name because the reproduction elements were all contained in a cartridge that users could just replace themselves when they ran out. Canon’s desktop photocopiers were a new-market disruption; in that they enabled people to begin conveniently making their own photocopies, rather than taking their originals to the corporate high-speed photocopy center where a technician had to run the job for them. The high-speed Xerox machine was very complicated, needed servicing frequently and only a technician could operate it. When Canon made photocopying so convenient, people ended up making a lot more copies, therefore through disruption innovation Canon has created new value network. Additionally, Canon’s innovation sources come from monitoring the market and following and adjusting to its competitors. In 1987 Ricoh revolutionized the photocopier industry with the release of the first digital photocopier. Thus, Canon followed releasing their digital photocopier products, which effectively consisted of an integrated scanner and laser printer. In 2001 Canon released its first two digital personal copiers, the PC1080F and the PC1060. Furthermore, with the disruptive innovation of touch screen technology, the company has decided to launch its own touch screen display in order to compete in the market. The new Digital IXUS 200 IS features Canon’s first ever touch screen display that delivers intuitive control to the customer and greater ease of use. Canon’s success is also based on the company’s commitment to strategic innovation. Strategic innovation means experimenting with new strategies, with new combinations of the ‘What, Who and How’ of a business. If a company identifies a new customer base, it will start behaving in a way that best satisfies the specific needs of those customers. This behavior will most likely be different from that of established competitors who are serving different customers (Markides, 1997). In the case of Cannon, Xerox leased big photocopiers to corporations through a direct sales force. Canon sold its personal photocopiers to end users through a dealer network. Thus Canon has adopted a different product, along with different selling and distribution strategies. They identified a customer segment that was not currently served by existing competitors. Then they designed their products and delivery systems to fit the requirements of this customer niche. New product innovations from Canon strengthen its leadership in imaging technology. In 2009, Canon has reaffirmed its commitment to innovation in product development with the launch of 38 consumer products ranging from an innovative new Digital SLR camera in its flagship EOS range to a germ resistant calculator, and a first voice guided printer. The new SELPHY ES40 is the first printer, which talks to its user. It provides spoken instructions on how to operate the printer in seven different languages; the guidance also gives advice to assist users of all ages to simplify the printing process. Successful product innovation requires more than the management of technology; it also must address users’ problems and needs, how the product will be used, and for what purpose. Conducting marketing research to obtain customers requirements and needs is a fundamental feature of Canon’s strategic innovation process, which the company adds onto its product innovation cycle. The new EOS 7D digital SLR camera is a completely new design created to meet the specific demands of photographers. During extensive development Canon went back to the drawing board, listening to photographers worldwide, in order to design the new digital camera to meet their specific needs. Commenting on the creation of the EOS 7D, Mr. Uchidoi, Group Executive of Photo Products Group, said, â€Å"We consulted over 5,000 photographers worldwide and asked them what they most wanted to see from a camera. Matching this insight with cutting-edge technology, we were able to develop a camera that truly gives photographers the versatile tool they require to experiment with their images. † Markides (Markides, 1990) argues that successful innovative companies need to adopt a new thinki ng process. New ideas emerge more easily if managers can escape their mechanistic way of thinking and look at an issue from different perspectives or angles. Thinking ‘out side of the box’ enables Canon to create new ideas and pioneer new trends. One area, which Canon has foreseen, was the growing importance of reducing global warming and becoming more ‘green’. Long before it was in fashion, Canon introduced a collection and recycling program for used toner cartridges. The company adopted a corporate-wide lifecycle assessment to understand and reduce its carbon footprint, and it has already achieved zero waste output at its worldwide plants. Canon has jointly developed a new bio-based plastic that incorporates plant-based and organic components to use in its products (Silverstein, 2010). Therefore, innovative thinking helps the company stay ahead of the competition. Another source of innovation is building on the organizations existing core competencies to create a new product or a new way of doing business that is totally different from the way competitors currently do business. Leveraging existing core competencies is therefore one way to create new products or new ways to compete. Canon’s core competencies lay in the combination of the precision mechanics, fine optics and microelectronics technologies that underline all their products (Prahalad and Hamel, 1990). However, most major breakthroughs occur not so much from amortizing existing competencies but from exploiting them to create and accumulate new strategic assets more quickly and cheaply than competitors. A company can use a core competence of a strategic asset in one small business unit (SBU) to help improve the quality of a strategic asset in another SBU (Markides, 1990). Because Canon is in two businesses, cameras and photocopiers, in which the processes of improving dealer effectiveness, speeding up product development or improving assembly-line productivity are similar, it can improve the quality of the strategic assets in its photocopier business by transferring competencies learned in its camera business and vice versa. Leveraging core competencies among Canon’s different business units therefore reduces the costs and saves valuable time. Through the years, Canon has continually provided a lot of innovative and revolutionary products. From the company’s very first product launched, a 35 mm focal plane-shutter camera called the Kwanon, to now a days most recent products, the company has integrated innovation to all of its business units. Canon is committed to developing innovative solutions to enhance business productivity that it invests 8% of annual turnover in R&D. This devotion to innovation translates to fact that the company is consistently rated in the top five most innovative companies in the world in terms of new patent registrations. Thus concluding, throughout disruptive, strategic and product innovation Canon stays one of the leaders in its markets.

The Theory Of Biology And Libidinal Drives - 1025 Words

Introduction Although a follower of Freud, Eric Erickson preferred to reject the idea of biology and libidinal drives. Unlike others of his era he was not trained in the sciences and believed that human interaction was the basis for forming the individual’s personality. Out of this belief came the idea of his Eight Stages of Development (Sougstad, 2017). Unique to his theory at the time was the inclusion of all ages rather than only encompassing early development. Each of these stages includes a crisis that must be resolved to move from one stage to the next. Our ability to move through these stages is impacted by factors including our own biological development as well as environmental factors. According to Erickson there is a†¦show more content†¦However, if there is a failure for this attachment to form and the mother infant relationship does not grow this can produce a stress response in the infant and prevent them from developing fully. As is widely accepted humans are imp arted with a social brain and require input from those around them to grow and develop properly. Neglecting to provide adequate stimulation and provide a â€Å"serve and return† interaction with the infant fails to provide the human interaction that is critical for development (Center on the Developing Child at Harvard University, 2013). This idea of â€Å"serve and return† is essential for the developing brain and involves a two-way interaction between the infant and mother or caregiver. While this idea of â€Å"serve and return† may look different across cultures there are certain expectations each culture has of its mothers about meeting the needs of attachment to their children (Small, 1997). These expectations in turn have an impact on shaping children into socially acceptable adults in their culture. Failure to develop at this stage could have long lasting effects on the infant affecting their ability to empathize, love, develop their moral conscience and show care for others. A separate, but equally important factor that could have an impact on proper infant development is post-partum depression. A mother struggling with post-partum depression may find it difficult to provide the care and nurturing her new infant needs. TheShow MoreRelatedEssay on The Psychoanalytic Perspective on Infant Development1350 Words   |  6 PagesSigmund Freud, the father of psychoanalysis, was the first to develop a theory of human development with a focus on unconscious processes and instincts. Freud believed unconscious conflicts in early childhood can determine who a person will be in adulthood. He also believed that the mind contains three parts known as the id, ego, and superego, which govern a person’s judgment (Frank, 2013). The id, which Freud believed to be present at birth, is viewed as the childlike part of the unconscious. ItRead MorePsychology in Greek Philosophy, Paragraphs1403 Words   |  6 Pagesphilosophy). Aristotle main ph ilosophical objective was to come up with a universal process of reasoning that would allow man to learn every conceivable thing about reality. In addition to philosophy, Aristotle was interested in geology, marine biology, and meteorology. He also developed the dialectical method in logic, not in the Socratic sense of the dialogue, but as a process consisting of thesis, antithesis and synthesis, which then became the new thesis. This was one of (if not the) mainRead MoreFreud s Theories Of Human Sexual Development Essay1961 Words   |  8 Pagesan integral part of the human experience, it is no surprise, then, that various prominent thinkers have created theories based upon stages of human sexual development. Arguably one of the most influential theories of human sexual development are Sigmund Freud’s stages of psychosexual development (Freud, 1905/1962). While this entry seeks to give the reader an overview of Freud’s theory of psychosexual development, it is al so a worthwhile venture to include the environmental, societal and philosophicalRead MoreOrganisational Theory230255 Words   |  922 Pages. Organization Theory Challenges and Perspectives John McAuley, Joanne Duberley and Phil Johnson . This book is, to my knowledge, the most comprehensive and reliable guide to organisational theory currently available. What is needed is a text that will give a good idea of the breadth and complexity of this important subject, and this is precisely what McAuley, Duberley and Johnson have provided. They have done some sterling service in bringing together the very diverse strands of work