Business – 8.1 Marketing analysis – Elasticity | e-Consult
8.1 Marketing analysis – Elasticity (1 questions)
Answer:
Increasing perceived differentiation: Advertising can highlight unique features or brand image, making the product appear less substitutable. This reduces price sensitivity, shifting the demand curve leftward and lowering elasticity.
Example: A high‑end smartphone campaign emphasises camera quality and ecosystem integration, causing consumers to view it as distinct from cheaper alternatives; a price rise therefore leads to a smaller drop in sales.
Creating brand loyalty and habit formation: Repeated promotional messages can build emotional attachment and habitual purchasing, which also dampens the response to price changes.
Example: A soft‑drink brand runs a long‑term sponsorship and loyalty‑card scheme; even if the price increases, loyal customers continue buying, making demand more inelastic.