Utility, Elasticity, and Demand

UTILITY, ELASTICITYAND DEMAND

Product campaign is a process where a company or a marketing agency – a second party puts an effort to create or increase awareness for a particular product or service. To be successful, a product campaign needs clear quantifiable goals and they should be communicated in very simple and summarized manner so as to reach the intended market segment or consumers.

The ultimate goal of the product campaign is to build awareness among your targeted consumers and consequently leads to increase in sales. Achieving this goal includes paid and unpaid methods, direct campaign in an example of unpaid method which involves communicating directly with consumers, for example through flyers, e-mail messages, mailed letters or mobile messaging. Another method is through advertisements and this includes placing ads on television, radio or newspapers. This method is considered the most expensive affair to carry out, often on television ad that is run at prime time costs more as well as ad placed on the front page of a newspaper. The third method is through public relations, which is working to have media outlets mention the product, service or message in their editorial content. Sponsorship of an event or contest or race is another better way to generate further positive publicity for the product or service. Other means to gain publicity for your product is through social media, search engines, outdoor media and online media, including interactive ads and banners on websites.

Components of marketing, pricing, and distribution as elements of the campaign are first, conduct a thorough market research- this is data about the market that is currently buying the product(s) or service(s) you will sell. You need to know your target market or market segment, market dynamics, benchmarks in the same industry as you are as well as your competitors and develop an edge over them and also understand legal implications involved

KEY TERMINOLOGIES UTILITY, PRICE ELASTICITY, AND DEMAND

Utility means a total satisfaction received from consuming a good or service. Generally, consumer’s utility satisfaction is not easy to measure. Nonetheless, we can determine it indirectly with consumer behavior theories, which assume that consumers will strive to maximize their utility.

Price elasticity is a measure of the relationship between a change in the quantity demanded of a particular good and a change in its price, with all other factors held constant. Mathematically this is presented as:-

Price Elasticity of Demand = proportionate change in quantity demanded —————————————————————— proportionate change in price

Demand refers to how much quantity of a product or service is desired by buyers or the willingness to go out and buy a certain product. The law of demand states that, if all other factors remain constant, the higher the price of a good, the lesser the quantity demanded and vice versa. This is well supported by the diagram below

DEMAND CURVE

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NOTE: The higher the price of a good, the lesser the quantity demanded and vice versa

Market equilibrium is situation in which the supply of an item is exactly equal to its demand. There is no surplus or shortage in the market. Price tends to remain stable in this situation.