#THE FIRM 2009 FILM AMAZON HOW TO#

Some products, such as cigarettes, tend to be relatively price inelastic since most smokers keep purchasing them regardless of price increases and the fact that other people see cigarettes as unnecessary. Whether a person considers a product a necessity or a luxury and the percentage of a personвЂ™s budget allocated to different products and services also affect price elasticity.

The number of competing products and substitutes available affects the elasticity of demand. Demand for essential products such as many basic food and first-aid products is not as affected by price changes as demand for many nonessential goods. By contrast, when the demand for a product stays relatively the same and buyers are not sensitive to changes in its price, the demand is price inelastic. People are more likely to buy them when their prices drop and less likely to buy them when their prices rise. Durable goods such as TVs, stereos, and freezers are more price elastic than necessities. When consumers are very sensitive to the price change of a product-that is, they buy more of it at low prices and less of it at high prices-the demand for it is price elastic. Price elasticity = percentage change in quantity demanded Г· percentage change in price The formula for calculating the price elasticity of demand is as follows. Likewise, demand for some products wonвЂ™t change even if the price changes.

Conversely, the waistband on a pair of dress slacks remains the same (doesnвЂ™t change) whether you pull on it or not. People are likely to buy a lot more soda at $1.50 per twelve-pack than they are at $4.50 per twelve-pack. Imagine the price of a twelve-pack of sodas changing to $1.50 a pack. Similarly, the demand for a product may change if the price changes. For example, the waistband of sweatpants may stretch if you pull on it. Elasticity refers to the amount of stretch or change. You can stretch an elastic waistband like the one in sweatpants, but itвЂ™s much more difficult to stretch the waistband of a pair of dress slacks. Think about a pair of sweatpants with an elastic waist. Price elasticity, or peopleвЂ™s sensitivity to price changes, affects the demand for products. Figuring out how consumers will respond to prices involves judgment as well as research. Will customers buy the product, given its price? Or will they believe the value is not equal to the cost and choose an alternative or decide they can do without the product or service? Equally important is how much buyers are willing to pay for the offering. In addition to gathering data on the size of markets, companies must try to determine how price sensitive customers are. How will buyers respond? Three important factors are whether the buyers perceive the product offers value, how many buyers there are, and how sensitive they are to changes in price. Next we look at each of the factors and what they entail.

Organizations must understand buyers, competitors, the economic conditions, and political regulations in other markets before they can compete successfully. If a company plans to sell its products or services in international markets, research on the factors for each market must be analyzed before setting prices. Those factors include the offeringвЂ™s costs, the demand, the customers whose needs it is designed to meet, the external environment-such as the competition, the economy, and government regulations-and other aspects of the marketing mix, such as the nature of the offering, the current stage of its product life cycle, and its promotion and distribution. A firm also has to look at a myriad of other factors before setting its prices.

#THE FIRM 2009 FILM AMAZON HOW TO#

Learn how to calculate the breakeven point.

Understand why companies must conduct research before setting prices in international markets.

Understand the factors that affect a firmвЂ™s pricing decisions.

The firm 2009 film amazon