Question

Demand elasticity is actually a quantitative measurement designed to show percentage changes in quantity demands by consumers. Elasticity is measured in terms of product prices, consumer income, prices of other goods and services, and several other variables. Elasticity, then, is a measure of the responsiveness to the changes in these variables. For the first part of this week’s discussion complete the following task by Wednesday and then respond to at least two of your classmates’ posting by Sunday:

• Select a product that is marketed in the U.S. that has shown significant movements in consumer demand elasticity. Identify the reasons for the movements and explain how the elasticity has affected management’s ability to control pricing.

Economists and management use data from market research and consumers to analyze the economic factors that influence demand for different products. In an effort to understand consumer behavior and demand companies use one or more non-statistical methods:

1. expert opinion;
2. consumer surveys;
3. test marketing and price experiments;
4. analysis of census and historical data; and
5. unconventional methods.

For the second part of this week’s discussion complete the following task by Friday and then respond to at least two of your classmates’ posting by Sunday:

• Select one of the five non-statistical methods, briefly define the method, explain the value in analyzing consumer behavior and demand, and then provide an actual example.

Answer 1

In the Us, the consumption of petrol has seen demand elasticity as the prices of petrol gave fallen due to falling crude oil ptoces and as results quantity of consumed petrol has increased . Hence, oil marketing companies which earlier sold for slightly lower prices by absorbing taxes. However since overall prices havr come down the earlier tax absorbed by comapnies is now passed onto consumers.

To analyze this companies can use following data:

1. Analysis of historical data and price movement can be used to determine future prices and consumption as predictive demand
2. Also interviews from experts in Industry can be helpful in gaining insights qualitatively.

Regression analysis is beautifully used to predict consumer behaviour for example trend chart can be plotted between consumption of chocolates versus pricing of chocolates.

Also non statistical methods like Focus group discussion is best used to understand consumers preference and willingness to buy prices.