Tuesday, July 24, 2012

MBA whiteboard: A diagram of positive elasticity

OK so I draw my demand curves a different way to the way economics people do, but it makes more sense to me to make the amount sold (written as "stuff" here) a function of price.

We can all - generally - accept that it's a negative slope of some sort (although the slope would normaly vary as you go along the horizontal axis) but the line is normally going down. as price increases, sales will tend to decrease. Negative price elasticity.

The little bump in the middle is the marketer's dream. We hear stories of it told wistfully. At some range of price, or for some products or with some customers the idea that if you charge more for a product you sell more. Positive elasticity.


A lovely idea. But are they the unicorns, or the "tasmanian tigers" of marketing folklore?

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