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Elasticity of Demand
The degree to which changes in marketing activity influence customer demand, critical for adjusting strategies.
Implications
A measure of how much the quantity demanded of a good or service changes in response to a change in its price, income levels, or other factors, often used to assess pricing strategies and market dynamics.
Example
Example: A luxury car brand analyzes the elasticity of demand for its vehicles, finding that demand is relatively inelastic, allowing it to increase prices without significantly reducing sales.
Related Terms
Different from price sensitivity, which is a general term, elasticity of demand quantifies the exact relationship between price changes and demand changes, providing a more precise metric.
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