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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?

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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?

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Elasticity of income This is the relationship of a change in our incomes to wanting more or different products or services

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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?

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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

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Elasticity of demand This is the formula – you have to learn it for the exam! % change in demand ------------------------- % change in price

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Elasticity of demand Example 1.Price of Mars Bar changes from 30p to 33p 2.Demand for Mars Bars falls from 1000 to 800 3.What is the elasticity of demand?

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Elasticity of demand Work this one out 1.Price of VW Golf cut from £1000 to £9000 2.Demand for VW Golf increases from weekly sales of 50 to 75 3.What is the elasticity of demand here?

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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?

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Hunch approach What in my experience, or using my gut reaction will happen to demand from my customers?

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Scientific approach Lets do some primary market research would you still buy this product, or as much of it if the price increased ?

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HL MARKETING THEORY ELASTICITY

HL MARKETING THEORY ELASTICITY

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