Evaluation of Demand Elasticity

Business reports should be typed, double spaced, standard margins, and all sources fully cited. Please attach any referenced newspaper and or magazine articles, and download any Website material and use standard footnotes and citations. Papers must be no longer than 8 double-spaced typewritten pages (Times New Roman font, size 12, number your pages, and turn in a paper copy in class and an electronic copy of your paper  by E-mail).

This is a research paper to qualitatively evaluate the demand price elasticity for a particular product at a particular retail location. Pick a product that interests you. ( ex: DeLonge Toaster Oven, Macy’s, Northridge Fashion Center.) Identify the closest substitute products at the same location, and the same group of products at the nearest geographic stores ( two to three). Get price and quality information of all products at all locations (some may be NA – not available) You may use online as an alternative location but not your main location.

Introduction: Describe your research project.

Section 1. Relative Price Comparison: Present the relative price information in a table with your product in the center, other products in the other columns, other locations in the other rows.

LOCATION Substitute 1 Your Product Substitute 2 Substitute 3
Alt Store A Sub 1 Price Your Prod.Price Sub 2 Price Sub 3 Price
Your Store Sub 1 Price Your Prod.Price N/A Sub 3 Price
Alt Store B Sub 1 Price N/A Sub 2 Price Sub 3 Price
Alt Store C N/A Your Prod.Price Sub 2 Price N/A

(If substitutes are in different sizes, make your price comparison per unit i.e. per ounce.)



Section 2. Analysis: Describe the quality characteristics of your product and compare them with the quality characteristics of the substitutes. Note how these quality differences may be reflected in price differences.

Optional: You might also do some web search for price elasticity estimates for your product class.

Section 3. Conclusion. Summarize your findings with your conclusion about the relative qualitative price elasticity of demand for your original product. ( very elastic, somewhat elastic, somewhat inelastic, very inelastic.)

Based on your conclusions, recommend a pricing policy for your product at your home location. (Increase price? Decrease price? No change?)

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