Slide4_2010Fall_MGMT324

Quantity sold brand a 8 120 brand b 12 60 before

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Quantity sold Brand A $8 120 Brand B $12 60 Before After 1 2 . 0 2 . 0 10 2 100 20 = = = AA ε 25 . 1 2 . 0 25 . 0 10 2 80 20 = = = AB ε
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Two useful summary measures Price Elasticity Matrix Aquafresh Colgate Crest Mentadent Clout Aquafresh -2.95 0.48 0.55 0.48 1.51 Colgate 1.09 -2.88 1.49 0.85 3.43 Crest 1.26 1.49 -3.00 1.16 3.91 Mentadent 0.40 0.32 0.43 -3.87 1.15 Vulnerability 2.75 2.29 2.47 2.49 Example: toothpaste market The cells in the matrix should be interpreted as the percentage change in the column brand’s demand due to a percentage change in the row brand’s price Clout is measured as the row-wise sum of the cross price elasticities while vulnerability is the column-wise sum Clout : What happens to the market when my brand changes price Vulnerability : What happens to my brand when others change price
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Things to Do Review the class slides so far Be ready to enjoy Labor day Submit “Advertising Yourself” Due: Sep. 3 (this Friday) 11:59PM Be ready to welcome and
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