Since one of the major Asian markets is China, the hotel industry in Samui severely affected by the “Zero-Dollar” tour. As a result, the number of Chinese people travelling to Thailand has been dropped. So, the government together with the tourist relating businesses owners need to publish a new policy, special promotion or discount to stimulate the industry. Thus, in order to find the optimal room rate for the hotels or establishing any effective pricing strategies, the hotel manager or any relevant department is needed to understand the behavior of the targeted group of customers as well as the price elasticity of demand. Currently, there are many studies and researches using price elasticity of demand as one of the main factors to construct …show more content…
The price elasticity of demand can be defined as the percentage change in demand divided by the percentage change in price. If the absolute value of the price elasticity of demand is more than one, the consumer is believed to be price elastic, which means that the consumer will be very sensitive to the price change. On the other hands, the consumer will be price inelastic if the absolute value of the price elasticity of demand is between zero and one, and the consumer will be price unitary elastic if the absolute value is equal to one. Thus, the price elasticity of demand of the market is need to be considered in order to adapt an effective pricing strategy. The price elasticity of demand can act as a tool to guide hotel managers to set an appropriate price for the available rooms by giving an idea that the hotel current room rate should be raised or dropped in which the hotel will generate more revenue. According to Cathy, Linda, and Mark (2004), if the hotel demand is price elastic, the discount of room rates will increase the hotel revenue. However, if the hotel demand is price inelastic, the percentage of demand that will increase will bring less than the percentage of price decrease. So, the hotel should increase their room rate if the price elasticity of demand in the market is inelastic and should not increase the price of the room if the price elasticity of demand is elastic. Walter (1989) and Heba, Mohamed S., Mohamed H., and Hisham (2011) also mentioned that there are many traditional pricing strategies that have been done by the hotel managers in which the goal to maximize the total revenue is not achieved since the price elasticity of demand has been omitted from their concerns. Thus, the price elasticity of demand or the willingness to pay of the consumer should be
Document A Businesses went from low income friendly to high-income friendly. Low-income housing decreased in Woodward from 1995-2012 -Social housing increased from 1995 to 2012 It would have been better to live in Woodward in 1995 because the properties are low income friendly and more people have the opportunity to live there. Many people in Woodward in 1995 would be put in the stereotype that low-income people are committing crimes Gentrification is not okay because many people in the world have issues with finances.
Nordstrom may experience price elasticity as a risk since it is a challenge for the company to forecast customers behavior to price changes that can affect the retail’s goods of sale. Therefore, it is important to
1. In the broader context (not specific to Dollar General), what is KKR’s investment strategy? What are the challenges KKR will encounter to make its investment in Dollar General successful? How could KKR add value to Dollar General?
1. “You went to the Chuck E. Cheese on Downs Boulevard? That one is dirty. Why didn’t you go to the one on Universal Avenue? It’s bigger and cleaner.”
Weaknesses: 1. The high seasonal dependency for most of the hotel facilities. 2. The imbalanced market coverage and business portfolio. 3.
Most executives believe pricing to be a zero-sum game, i.e. price increase shall lower volume of sales thus in turn hurting the margin gain, but the other way round need not necessarily be true. This problem arises owing to the setting of prices based on cost-plus basis rather than a customer value point of view basis. The methods to capture such value are: • Better the understanding of
Price and demand of an item is significant viewpoint which must be considered by Toyota in promoting economy as price and demand impact purchaser what to purchase. Customer’s demands all the more in lower price and less at higher price. Price elasticity of demand is a measure of the greatness by which customers modify the amount of some item that they buy in light of progress in the price of that item Boyes and Melvin (2012). Price elasticity of demand will help Toyota to decide the amount an
Hollister offers wide range of consumer shopping goods related to the Clothing line. They offer different product with different versions to Dudes and bettys include graphic and “crew and tee shirts”, polo’s, Henley’s, cardigans, shirts, pullovers, outerwear, rinse or wash slim jeans, flip-flops, shoes, perfume and boxers. Product Attributes: High Quality, Unique comfortable designs inspired by the SoCal Theme and different styles and Colorful patterns. Product Packaging Hollister is well-known for its stylish shopping bags that use young attractive models on them.
ECONOMICS PROJECT Name: Saatwic Malhotra Course: BBA.LLB (H) Section: A Enrollment Number: 7058 ACKNOWLEDGEMENT I express my sincere thanks to Mrs. Tanu Sachdeva, my economics teacher who guided me throughout the project and also gave me valuable suggestions and guidance for completing the project. She helped me to understand the issues involved in the project making besides effectively presenting it. My project has been a success because of her. PEPSICO • PepsiCo, Inc. is an American multinational food, snack, and beverage corporation headquartered in Purchase, New York. PepsiCo has interests in the manufacturing, marketing, and distribution of grain-based snack foods, beverages, and other products.
4.4 Pricing Strategy For a number of reasons, price is one of the most important aspects of an effective marketing strategy (Gerstein & Friedman, 2015). First, price is the only marketing variable that generates revenue. Second, buyers see price as an attribute of value (Tanner & Raymond, n.d.). Consequently, an organization must carefully assess its internal and external environment to choose the most effective pricing objective, which—in turn—will drive a product’s initial pricing strategy.
The Five Competitive Forces of Industry will influence prices, costs and investment (Porter, 1980). The potential retaining of customers, profitability of a holiday inn can be determined by being aware of the strengths and weaknesses of the hotel industry. (Figure 2.2: Porter’s Five Forces Model (Source: Adapted after Porter,2008) Porter’s 5 model helps in success of Holiday inn between suppliers and buyers. Giving customers the service they are looking for, acquire customers, retain customers and looking externally how the competitors are doing is very important. To ignore the power of customer relationship is not an option.
In the case of hotels, suppliers create different consumer segments, we can relate to them as lower-end consumers, and higher-end consumers. Obviously, hotels cannot set the price that higher-end consumers are willing to pay, because all lower-end consumers will not be able to afford the good. Inversely, if hotels set the price that lower-end consumers are willing to pay, higher-end consumers gain huge consumer surplus, thus lowering the profit for the suppliers. In order to take the consumer surplus, hotels keep lower prices for some rooms in order to target lower-end consumers and offer some higher quality rooms (for example presidential suits) to target higher-end consumers. The difference in revenues providing different rooms and the same ones is seen below.
The pricing strategy or pricing policy is one of the most important managers make for a product as it affects the profitable outcome and competitiveness that a product may make. (Toni, 2017). A business can use a variety of pricing strategies when selling a product or service. The price can be set to maximize profitability for each unit sold or from the market overall. It can also be used to defend an existing market from new entrants, to increase market share within a market or to enter a new market by dropping the price or offering more benefits with the device such as packages.
In terms of controlling, the management of Marks and Spencer has frequent reporting of expenditures with costs to provide a form of feedback. The reactions of managers to such type of data rely on the expectations or the formal budget or planned targets. The management believes in collecting and assigning cost data that is being shifted away from control. There is a recognition related to the repetitive exercise of planning and re-planning for creating a full time job for accountants. The assessment and evaluation of cost data in the aspects of launching new product by Marks and Spencer is about gaining insights and learning ways for achieving the goals of organisation in most effective manner.
1.0 INTRODUCTION In an economy, there exists different market structures to accommodate different industries and firms. This study will be made to understand in further depth the market power of different market structures, and in particular an example of using case studies of agricultural sector of the French markets to explain how an ideal perfectly competitive market works. This will then be further strengthened with several references linked to the case study. 1.1 Monopoly market