Price Elasticity, Research Paper Example

Name a company that offers discounts and/or coupons. For that company, what are the advantages of offering discounts and/or coupons?

Competition is inevitable in the business world and companies need to innovate strategies to maintain a competitive edge. It is for this reason that coupons have become popular in the companies and a good example is CARP. A coupon is a form of discount that is aimed at attracting and retaining customers. CARP enjoys several advantages for offering coupons. To the customer, a coupon is a special offer and not just a reduction in price. This guarantees retention of customers even after coupons are withdrawn. The customer is also able to make savings as the business makes more sales. Retailers get to enjoy additional compensation from manufacturers for handling the manufacturers’ coupons. (Answers Corporation, 2010)

For the company you wrote about in answer one, what are the disadvantages of offering discounts and/or coupons?

Despite the numerous benefits enjoyed by CARP, there are some disadvantages that go with it. These include reduction in effectiveness due to overreliance on coupons. It is also questionable on whether CARP would increase its business if it was using coupons for the first time. It also beats logic for a company that is well established like CARP to issue coupons since a loyal customer will still buy its products given a coupon or not. Fraud can also occur if there is excess distribution of coupons.

Name a product, That currently has elastic demand. For this specific product, what can you, the marketer, say or do to convince consumers that they need to purchase this product on a regular basis? 

According to Schenk (n.d.), a product has elastic demand when a customer’s buying decision is affected by its change in price. An example of this is petrol. People buy more petrol when petrol prices fall. Customers can be convinced to purchase this product on a regular basis by introducing coupons. This would capture them at all times.

Name a company or product, that has changed its method of distribution. In your opinion, explain why the company changed the distribution method. 

A company’s normal way of running is easily affected by the occurrences in its surrounding. Some of these occurrences may include economic change, government laws, competition and other environmental changes. COKE (2009) has recently changed its distribution methods and business practices due to the disputes by bottlers of Coca-Cola products regarding the Coca-Cola bottler system.

References

Answers Corporation, 2010. Coupons. Retrieved on November 12, 2010 from http://www.answers.com/topic/coupons

COKE (2009). Coca-Cola Bottling Co. Retrieved on November 12, 2010 from http://www.wikinvest.com/stock/Coca-Cola_Bottling_Co._Consolidated_(COKE)/Ability_Change_Distribution_Methods_Business_Practices_Negatively_Affected

Schenk (n.d.). Price Elasticity. Retrieved on November 12, 2010 from http://ingrimayne.com/econ/elasticity/Elastic1.html