Elastic demand in business
Elastic demand in business occurs the rate of goods demanded goes beyond the percentage rate of the prices in the market. For instance, if the amount of milk rises by10% and the price falls by 5%, the ratio will be 0.10/0.05, which results in = 2. This implies that when there is a difference in the rates between the quantity of the commodities demanded and the changes in the prices the business will be adversely affected (Zetina et al., 2019).works of literature have shown that during the valuation of the elasticity of demand, if the differences have a negative sign, the investors ignore the negative sign. The concept applies to all the goods except for some categories of goods.
Inelastic demand refers to when the value of the goods demanded by the customers does not affect the prices. This means that is the demand for bread rises by 10% and the price change by 1%, the ratio will be 10 (Purohit, 2017). Research has shown that inelasticity is most experienced with household goods. Inelasticity of demand makes the purchasing power of the customers remain constant. According to the scholar, this is better than the variations that might be brought about by elasticity of demand. In this sense, the stakeholders should be prepared for the changes that might come about in business. This way, they can make significant steps towards the achievement of their long-term goals.
Elastic and inelastic goods are essential since they are vital for the wellbeing of people. Inelastic goods such as petrol are relevant for people with vehicles since people have to get to where they want. This is the same as elastic goods since they serve the needs of the people.
Pricing is a critical factor in business since it guides the purchasing ability if the people (Kienzler & Kowalkowski, 2017). For this reason, the stakeholders should consider different factors in the venture that they wish to engage in. The stakeholders, for instance, should consider the ability of the consumer to purchase the goods that are already in the market. This makes the stakeholders have a rough idea of what to expect in the market. Research has it that the stakeholders should go for the most suitable techniques that will make them compete with the existing businesses actively.
Different approaches are used in setting the prices of the commodities. Penetrative pricing technique, for instance, entails setting the low prices for the commodities at the beginning of the venture. The stakeholders use the strategy to attract more customers to their venture. Research has it that the strategy can work at first but take a different turn later. This, therefore, implies that this is not a suitable technique for a business that has long term goals.
Other than that, the stakeholders use the prices that are currently in the market (Kienzler & Kowalkowski, 2017). The strategy can work with some extra efforts in the marketing sector. Customers are critical in business since they are the key players since they contribute to the success of the business. The service offered by the business offers a competitive advantage to other ventures in the market. As much as the ventures might be offering similar commodities or services, they have to look for ways to stand out. From this inference, the stakeholders should do all that takes to ensure that they remain relevant for a long time.
Pricing techniques are essential in businesses since wrong approaches can do the business to collapse. It is factual that most of the businesses have failed to achieve their goals due to a lack of the needed knowledge. Regarding this, the key players should seek the relevant knowledge to succeed in their undertakings.