Marketing Management – Essay Example
Marketing Management Concept of Price Elasti One of the most important considerations for the marketer is to generate as much revenue as possiblebut the obvious question that crops up is how to generate revenues. This might be possible by selling as much products as possible to the consumers, but then another question is how it can be done. Marketing has a key role to play in these regards and the most vital part of the organizations’ marketing strategy is the price that is charged for the products. Marketers need to know how receptive or elastic the demand is to corresponding change in price. The most important aspect of a product’s demand curve is to understand how much the quantity demanded changes with the change in price. This measure is called price elasticity of demand. It can be calculated by dividing the proportionate change in the quantity demanded by the proportionate change in price. It is to be noted that if the firm decides to cut the price of the product by 20% and the demand for the product increases by 40% then the price elasticity will be 4. If the demand for the product hardly changes with the small change in price then the demand is said to be inelastic. If there is huge change in demand with the change in price, then the demand is considered to be elastic. Demand will be less elastic if there are few or no substitutes and competitors at all.
Kotler, P., & Keller, K., (2009). Marketing Management. New Jersey: Prentice Hall. 13th Ed.