What do we know about advertising and price elasticities?

Colin McDonald

Knowledge of a brand’s price and advertising elasticities makes it possible to determine what would happen if advertising expenditure and/or its price were changed.

What do we know about advertising and price elasticities?

What are they, and what can they tell us?

Colin McDonald

FOR BUDGETING and other purposes, it is helpful to have some way of measuring, and discussing, how responsive sales volume is to changes in marketing activities. This need is met by the concept of 'elasticity' - the range within which sales can respond to a given stimulus. Advertising and price elasticity are the most important; there can also be others as a subset of price, for example 'promotion elasticity'. These elasticities are ways of describing short-term effects. Specifically,...

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