If two goods are substitutes, we should expect to see consumers purchase more of one good when the price of its substitute increases." (Moffat, 2006) How much a price range is there, really one might ask? Although some washers, for example, may be several hundred dollars more or less expensive than others, the higher line goods posses more desirable amenities or physical features desired by the higher-end consumer. Hence, within different price ranges, there is much less apparent elasticity. Also, market consolidation must be taken into a factor. Given the relatively narrow range of substitute goods, and the merger of many of the leading appliance manufactures, one would describe the demand for the appliances produced by Maytag to be relatively inelastic, within particular varieties of durable goods.
Describe the issues that affect consumer and the price
Consumers do not buy washing machines or refrigerators on an annual basis. The purchase of a home good is a major purchase requiring research and thought. Thus, consumers will often sacrifice price, to some extent, to get a more reliable and longer-lasting brand such as Maytag. On the other hand, however, because so much research and thought goes into the purchase, consumers are also willing to shop around. The price offered by different local stores, and promotions may affect the pricing of the good, so consumers may wait until they can find a good discount or sale period. Finally, because some consumers must borrow money to purchase such necessities, the interest rate, or availability of inexpensive lines of credit, may be a crucial factor in making decisions about purchases.
Suggest strategies to enhance revenue based upon all of the above information
One possible asset possessed by Sears that Maytag does not have is that...
As noted, the recent "supply chain streamlining" is a move to cut costs and build greater economies of scale. This is consistent with a firm engaging in a cost leadership strategy. That the company also has strong brands allows it to continue to pursue its longstanding differentiation strategy as well. However, the company has been slow to respond to new trends, a reflection of its conservative culture and the
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