. Explain what must occur for the strategies suggested by the following headlines to be successful:
A. “Honda plans to launch a less expensive ‘value-priced’ Accord.”
B. “Procter and Gamble cuts prices of Dash detergent 30 to 40%.”
Can you help?
2007-08-22 12:50:10 · 3 answers · asked by jennifermlayne 2 in Social Science ➔ Economics
A. The new cheaper product better not be a substitute for the regular priced Accord. It better attract new demand. A new market that wouldn't have purchased the regular priced Accord, but is willing to buy this new one.
B. Demand must be price elastic. So that a drop in price brings about a larger increase in quantity sold.
2007-08-22 15:14:19 · answer #1 · answered by JuanB 7 · 0⤊ 0⤋
A. the demand for such value priced cars must be inelastic, that means even if the price is high people will still buy it as they prefer quality to quantity
B. the demand for detergents must be elastic, in this case, even though they reduce prices, they will gain higher overall total revenues as more consumers will consume the good now. the increase in volume is proportionately larger than the decrease in the price
2007-08-23 01:18:14 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Easy profits by dumping the over load of your product. Top management gets off from being blamed for over production.
2007-08-22 20:32:30 · answer #3 · answered by Anonymous · 0⤊ 0⤋