Assume you are the director of marketing for a firm that manufactures candy bars

Question

Assume you are the director of marketing for a firm that manufactures candy bars. You feel the time is right for your company to increase the price of its candy, but you are concerned that increasing the price might not be profitable. You feel you should examine the elasticity of demand. How would you go about doing this? What findings would lead you to increase the price? What findings would cause you to rethink the decision to increase prices? What strategies could we use to justify an increase in price?

Explanation / Answer

Company needs to have a cutoff for it Revenue or price margin taking all the cost in to consideration. As a director of marketing , i would like to see the cost incured by company to meet the current demand, revenue and margin .

If customers are price sensitive, then increasing the price , will definately decrease the demand . Insuch cases , if we increasing the marketing budget, then demand will also rise , provided margin will drastically come down . Because cost of marketing increased . I would like to see the cost effective ways of marketing that will increase the demand of the product . Cost effective ways of marketing can be implemented by having innovative marketing techniques like calling low cost celebrities who do branding in media etc. if these cost effective ways of marketing do not hold good , then it will definatley impact the margins. Most importantly creating brand imaage is very important . As a director of marketing , I need to strive to get the cutoff margin, so that company gets the growth as per the set goals.

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