Week Two: Demand Elasticity
Like many other companies, Procter and
Gamble Co. (P&G) needed to make an adjustment with respect to its pricing
strategies due to a declining consumer demand during the Great Recession
(2007-2009). Based on the assigned reading for this module and the articles
shared under Module 2 (P&G cases), analyze how the company's pricing
policies depend on how consumers respond to price changes? Identify and discuss
the different factors that affect consumer responsiveness to a company's price
change (availability of substitute, taste, income etc.). Please also discuss
the different strategies used by P&G to increase profitability.
Ellen Byron, “P&G, Colgate Hits by
Consumer Thrift- Household Products Makers See Sales Weakening, Raise Prices to
Keep Quarterly Profits from Plunging,” Wall Street Journal (Online), May 4,
Ellen Byron, “P&G Puts Up Its Dukes
Over Pricing-Consumer-Products Makers Risk Margins to Grab Market Share from
Rivals and Cheap Store Brands,” Wall Street Journal (Online), April 29, 2010.