Xbox One X Controller
The marketing manager of Microsoft finds that customers prefer PlayStation more than Xbox One X, and he plans to reduce the price of Xbox One X console and, at the same time, introduces a new controller.
His goal is to maximize the profits generated by the combination of Xbox One X and the new controller. He believes that this is a good strategy to compete with Sony PlayStation.
He provides the following information:
Question: Should the marketing manager lowers the prices of Xbox One X after considering the profits generated from the new controller? If yes, how much price reduction should the marketing manager offer?
[Please type the answer]
Here the Elasticity of Demand is given as 2.6
Elasticity of Demand 2.6 = Percentage Change in Quantity Demand / Percentage Change in Price
Possible percentage change in Quantity Demand = 26
Possible percentage change in Price = 10
Therefore 26/10 = 2.6 (Elasticity of Demand)
Price change required is 10% decrease ie. $ 389.9 X 90% = $ 350.91
Effective price reduction for XBOX is $ 38.99
Combined Price - $ 350.91 + $ 59.99 = $ 410.9
Xbox One X Controller The marketing manager of Microsoft finds that customers prefer PlayStation more than...
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