Explain the product life cycle concept. What are the stages of the product life cycle?
Price elasticity, discussed in Chapter 10, is a measure of the sensitivity of customers to changes in price. Price elasticity is calculated by comparing the percentage change in quantity to the percentage change in price:
For example, suppose a manufacturer of jeans increased its price for a pair of jeans from $30.00 to $35.00. But instead of 40,000 pairs being sold, sales declined to only 38,000 pairs. The price elasticity would be calculated as follows:
Note that elasticity is usually expressed as a positive number even though the calculations create a negative value.
In this case, a relatively small change in demand (5 percent) resulted from a fairly large change in price (16.7 percent), indicating that demand is inelastic. At 0.30, the elasticity is less than 1.
On the other hand, what if the same change in price resulted in a reduction in demand to 30,000 pairs of jeans? Then the elasticity would be as follows:
In this case, because the 16.7 percent change in price resulted in an even larger change in demand (25 percent), demand is elastic. The elasticity of 1.50 is greater than 1.
What are the advantages and disadvantages of shipping by rail? By air? By ship? By truck?
Explain the different types of direct selling. What is the difference between a multilevel network and a pyramid scheme?
What is media planning? What are the strengths and weaknesses of traditional media, that is, television, radio, newspapers, and magazines?
What is guerrilla marketing? What is ambient advertising? Give examples of both.
Explain and give an example of cost-plus pricing, target costing, and yield management pricing.