Saturn Corp Price Elasticity

Saturn Corp Price Elasticity

2006 Introduction

In marketing terminology , we are accustomed to hear about advertising at any media such as television , radio , and internet and well-known marketing mix of 4Ps composing of Place , Product , Promotion , and Price In general , marketing consists of the measures we use to reach and persuade our prospects . All of marketing program will cost producers or manufacturers , which in turn will have impact on the price determination of a product

Pricing is therefore an important issue for companies since it predicts and determines the destiny

of their merchandise whether it is salable like ice cream in the summer or slump like cooling fan in the winter . No wonder if the companies determine to cut the price at the slowing down period . That is a common action but it is not when companies turn out to have exact decision on what kind of merchandise , when to do , at which store , and how big the discount factor in to boost sales the fading merchandises . In short , the pricing of a product depends on many factors such as demands for the product and how excessive the product exists in the market (supply

According to Frye (2006 , the right price determination of a product that provide optimum revenue is ongoing process since it deals with data collection of customers habit and calculation of price elasticity of demands of products . The elasticity is important factor in price decision since it explains how price changes affect customers enthusiasm to choose and buy products

Concerning the pricing determination , this will elaborate and then calculate the price elasticity of demand for Saturn Sky Model . Saturn Sky is one of Saturn Corp 's line products . Prior to the discussion , this will elaborate the theory of price elasticity of demand , discuss usable formula to calculate it , and explain the meaning of the price elasticity for the Saturn Sky Model . However since there is no sales data within the past several years of Saturn Sky Model , we will assume the sales data since it is needed to calculate the price elasticity of demand of Saturn Sky model

Figure 1 One of Saturn Sky Model

Source : HYPERLINK "http /www .saturn .com " www .saturn .com

2 . Calculation of Price Elasticity of Demand of Saturn Sky Model

2 .1 Theory of Price Elasticity of Demand

Elasticity by meaning refers to the change of demand and supply as a response toward various stimuli . For a more specific discussion , we will elaborate Price Elasticity over Demand . Price Elasticity of Demand is the responsiveness measure of quantity demanded to a change in price with all other factors held constant (`Price Elasticity of Demand 2004

For example , if the price elasticity of demand is 2 , it means that if price is raised from the prevailing level , the percentage change in quantity demanded will be 2 times the percentage change in price . For example , if the price of a can of Pepsi Cola is raised 1 percent quantity demanded will likely...