38 Advertising Marketing and Branding Advertisement can play a major role in

38 advertising marketing and branding advertisement

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3.8 Advertising, Marketing and Branding Advertisement can play a major role in the decision-making process of a customer. This may especially be true for fast moving consumer goods, such as chocolate. The automobile industry is a highly competitive market environment. Therefore, within the automobile industry, it is vital to build a strong brand awareness of the company. Volkswagen has actually done a good job in this area over the past year by establishing a well trusted brand, which is known for good quality and safety. Volkswagen is often regarded as a trusted family car. Nevertheless, in order to stay competitive, VW needs to keep up with the activities of the competition in order not to lose this well trusted image.
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3.9 Government Policy Government plays a key role in an economy. Concerning demand, a government policy can affect the domestic market by increasing or decreasing taxes for instance, but it may also have an impact on foreign markets by reducing barriers or possibly building barriers in the form of tariffs. As the automobile industry is one of the biggest industry in many economies, it is also subject to precise observations of the government. Due to the latest scandals occurring in the car industry, the respective companies including Volkswagen are still subject to government inspections. Due to the emission issues, some countries like Austria and Germany even think about stricter regulations of car engines. Evidently, the car industry also has a lot of power. Nevertheless, given the current circumstances the government is very sensitive to these environmental issues and there may be some major changes expected that will most likely not act in favor of the automobile manufacturers. 3.10 Price of Complementary Goods The price of complementary goods is less importance due to relatively small price in comparison to price of a car. Some complementary goods are tires and car insurance.
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4 Determinants of Price Elasticity Price elasticity measures how sensitive buyers are to changes in price. Price elasticity is used to measure the sensitivity to the increase or decrease in the quantity demanded, compared to the change in price. If the change in quantity exceeds the change in price demand is considered to be elastic. The formula, which is commonly used to calculate price elasticity which equals to % change quantity demanded % change price For a company the awareness of the elasticity of its own products is essential for pricing policy. 4.1 Substitutes Out of all the factors that determine the price elasticity of demand, the availability of the number and kinds of substitutes for a commodity is the most important factor. When substitutes are available for a commodity good, the demand tends to be elastic. If the price of such a commodity increases, people will shift demand to its close substitutes and as a result the demand for that commodity will greatly decline.
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  • Winter '18
  • Renault, Volkswagen, Porsche, Volkswagen Group, Scania

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