Presentation on theme: "This man is a millionaire – his income is £500,000 a year. Would it make any difference to him wanting to buy a new Rolls Royce if his salary increased."— Presentation transcript:
This man is a millionaire – his income is £500,000 a year. Would it make any difference to him wanting to buy a new Rolls Royce if his salary increased to £600,000 a year?
This is a newly qualified doctor – she earns £23,000 a year Will it affect her demanding / affording a new car when she Earns £40,000 a year after 4 years?
Elasticity of income This is the relationship of a change in our incomes to wanting more or different products or services
Last Marketing topic of AS Marketing Elasticity of demand – Unit 9 in Marcouse textbook We going to find out: What is it? How do you measure it? Why is it important?
Elasticity of demand A way of measuring how a customers demand for products or services is affected by change in price / advertising expenditure or consumer incomes
Elasticity of demand This is the formula – you have to learn it for the exam! % change in demand % change in price
Elasticity of demand Example 1.Price of Mars Bar changes from 30p to 33p 2.Demand for Mars Bars falls from 1000 to What is the elasticity of demand?
Elasticity of demand Work this one out 1.Price of VW Golf cut from £1000 to £ Demand for VW Golf increases from weekly sales of 50 to 75 3.What is the elasticity of demand here?
Decision Making – hunch or scientific? You have to decide whether you should increase your prices in order to make more profit What thoughts should go through your mind?
Hunch approach What in my experience, or using my gut reaction will happen to demand from my customers?
Scientific approach Lets do some primary market research would you still buy this product, or as much of it if the price increased ?