PED by NTSDE

2025-02-20 04:56:07 UTC

As there is a high demand, these are elastic groceries are elastic as they have many substitutes and many competitions brands and they offer regular discounts as they want to increase revenue.

jakebatesbrannan — 2025-02-20 04:56:33 UTC

Jake: supermarkets are able to more easily put prices back to normal compared to luxury brands.

To maintain image.

Things in a supermarket have a shorter shelf life.

ntsdepad — 2025-02-20 04:57:02 UTC

Supermarkets (Elastic Demand)

Products like bread, soda, and snacks have many substitutes (e.g., Pepsi vs. Coca-Cola).
Lowering prices increases sales significantly, boosting total revenue.
Example: A 10% discount on a Coca-Cola bottle increases demand by 30% → Elastic Demand (PED > 1).

Luxury Brands (Inelastic Demand)

Premium brands like Gucci, Rolex, and Chanel maintain exclusivity.
Raising prices doesn’t significantly reduce demand (high brand loyalty).
Example: If Rolex raises its price by 15%, demand only drops by 2% → Inelastic Demand (PED < 1).

Solution:

Supermarkets should use discount pricing to attract customers.

Luxury brands should maintain high prices to preserve brand exclusivity