The exclusivity of these higher-end products and their cost structures also are deliberately now being created to ensure barriers to entry from mass merchandisers. The threat of a mass merchandiser dominating the supply chain and driving down costs to sell on brand equity alone continues to force marketers of key brands in this industry to concentrate on defensible differentiation. As a result of all these strategies and the inherent structure of this industry the price elasticity of high-end cotton apparel continues to be protected from becoming too price-inelastic over time.
Total Revenue Implications
Clearly the revenue implications of managing products with low price elasticity as toys are require an inordinate level of supply chain, distribution and logistics efficiency as the per-unit margins are already under severe pressure. For products that have higher levels of price elasticity there is the benefit of typically greater gross margins yet the constraint of longer sales cycles. Intermediating between these two extremes is the need for demand management and demand planning on the part of retailers who stock products with these extreme price elasticity characteristics. For the retailer selling high-end women's cotton apparel the challenge is to create a suitable inventory management model that capitalizes on enough inventory turns to allow for maximum profits without degrading the brand's equity or inadvertently redefining the demand curve of an industry (Shahnawaz, 2004, 69-84) for toys which have inherently shorter lifecycles and much more of a shorter sales cycles (Farrell, Shields, 2007, 445) the challenge to retailers in attaining maximum profits on these products are to focus first on operational efficiencies. The need for rapid inventory turns, accurate demand forecasting and planning, pricing optimization and optimization of shelf space to the floor level are all needed to ensure profitability is attained in this highly inelastic market. Counterbalancing each requires an integrated supply chain capable of managing the rapid inventory turns necessary for inelastic products while preserving the profitability and accuracy of demand forecasts for the highly price elastic product of high-end women's...
Elasticity of Demand Discuss elasticity of demand as it pertains to elastic, unit, and inelastic demand Price elasticity of demand is the measure of the change in the demand of a given product as a response to a change of its price. When demand is inelastic (a value versatility less than 1), a value increase raises downright income, and a value reduction lessens absolute income. The point when interest is elastic (a
Price Targeting Industry Customers usually complain that they purchased the same product or service at higher price than their friends did. This is actually the price targeting technique that sellers use in order to receive maximum profits or revenue. However, if the customers are aware of the actual price and sellers' technique then they can make a better deal. Price Targeting Price targeting is one of favourite techniques of vendors to earn more
The article gives the example of China, where as much as $360 billion were allocated by the government towards the process of stimulating demand on the market. The process did not target only the car manufacturers, but rather all industries, while the instruments of actually putting the money to use ranged from fee vouchers to direct stimuli for the businesses. Countries such as Germany or the U.S. put in more
Price and Quantity of Milk A Scientific Study Declares Milk Good for the Human Body In such a case, the quantity of milk demanded will increase. The increase in the quantity of milk demanded in this scenario can be attributed to the change in customer preferences. Here, the number of customers demanding the product (for its declared benefits) will increase. Further, it is also likely that the existing consumers of milk
The interest of certain categories of public in promoting this trend has significantly intensified. Therefore, the demanded quantity of organic products is likely to increase. 2. There are several factors that influence the organic products supply. The most important factors are represented by prices, costs of production, prices of traditional products, weather, and technology. In the case of the influence of prices, if they increase the supplied quantity of organic
Pricing Strategy Price Reduction Strategy What are the implications for revenue and profits of implementing the price cut? The implications for revenue and profits are dependent on the demands and supply of the product. If there is not enough demand for the product, a reduction in the price of the product by 10% is unlikely to boost the demand of the product. On the other hand, if there is sufficient demand of the
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now