Outcome # 2 The 5 Cs //Customer

Question 1

2. Customers

Answer 1

about understand customer reactions to diff prices

It is important to understand how prices are affected by demand

Question 2

Demand Curve

Answer 2

Shows how many units of a product or service consumers will demand during a specific period at different prices.

Exceptions
prestige products or services. Those that consumers purchase for status rather than functionality.

Question 3

Prices elasticity

Answer 3

How consumers react to a change in the price

For necessary items, customer are less sensitive (i.e Milk)

Product with substitutes can be affected if price rise ( i.e steak)

Price elasticity of demand : % change quantity demand/ % Change in price

Price sensitive/ eslastic / Pr. elsty less-1
Price insenstivie / inelastic // Pr. elsty greater -1

Question 4

Factor influencing elasticity of demand

Answer 4

Income effect
Refers to the change in the quantity of a product demanded by consumers because of a change in their income.

Substitution effect
Refers to consumers’ ability to substitute other products for the focal brand, thus increasing the price elasticity of demand for the focal brand.

Price Elasticity
The percentage change in demand for Product A that occurs in response to a percentage change in price of Product B.