Question

Comment and explain with the supporting rationales on the statements listed below.

(a) The ‘PriceWatch’ campaign introduced by the supermarkets is beneficial for the customers.

(b) Advertising campaign by ‘Heineken’ is useless when the advertising elasticity of beer for market as a whole is close to zero.

Answer 1

Price watch campaign use the price elasticity as tool for advertisement to increase the sale of the goods and services. Which is happend with the help of price watch system ( Price Watch system means that you can stay informed of every price change on a daily basis.The system can even focuses on the most significant changes happend in the market.) through the price watch system the seller/producer can analyse the market price and after they fix their price and advertise to the consumer, about the advantage of product and show the comparitive price advantage from their competitors.The price watch campaign has number of advantages , They can buy the their product in cheaper price due to they get detail market price changes .And they can buy the best product from the best manufactures.The price watch campaign create a tight competiton among manufactures so they cant impose higher price so it will be favourable to the consumer. price watch campaign describe the trend of future price tooo so this price forcasting helping consumers to plan their consumption and it will save their income throgh they can buy product while low price.

Advertising elasticity of demand (AED) Which is a measure of a market's response to increases or decreases in satisfaction or advantages from an advertising . Advertising elasticity is a measure of an advertising campaign's how much create new sales. Which is calculated by dividing the percentage change in the quantity demanded by the percentage change in advertising expenditures. A zero advertising elasticity means the increase in the volume of advertise does not make any variations in demand in the case of advertised goods and services. Advertising make positive and negative elasticity that means elasticity of advertisement increases means demand of the particular goods increase by huge level of advertisement and vice versa.In the case of Heinken beer, there is occurred an zero advertising elasticity so that become a useless advertisement.