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Business_A-level_Cie

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  1. business-and-its-environment

    enterprise
    6 主题
  2. business-structure
    6 主题
  3. size-of-business
    3 主题
  4. business-objectives
    3 主题
  5. stakeholders-in-a-business
    2 主题
  6. external-influences-on-business
    12 主题
  7. business-strategy
    10 主题
  8. human-resource-management
    human-resource-management-hrm
    8 主题
  9. motivation
    4 主题
  10. management
    2 主题
  11. organisational-structure
    5 主题
  12. business-communication
    5 主题
  13. leadership
    2 主题
  14. human-resource-strategy
    3 主题
  15. marketing
    the-nature-of-marketing
    7 主题
  16. market-research
    3 主题
  17. the-marketing-mix
    6 主题
  18. marketing-analysis
    5 主题
  19. marketing-strategy
    3 主题
  20. operations-management
    the-nature-of-operations
    3 主题
  21. inventory-management
    2 主题
  22. capacity-utilisation-and-outsourcing
    1 主题
  23. location-and-scale
    2 主题
  24. quality-management
    1 主题
  25. operations-strategy
    4 主题
  26. finance-and-accounting
    business-finance
    2 主题
  27. sources-of-finance
    3 主题
  28. forecasting-and-managing-cash-flows
    1 主题
  29. costs
    4 主题
  30. budgets
    1 主题
  31. financial-statements
    4 主题
  32. analysing-published-accounts
    6 主题
  33. investment-appraisal
    2 主题
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The concept of promotional elasticity of demand

  • Promotional elasticity of demand measures the responsiveness of demand for a product to a change in the amount of money spent on promoting it

  • In most cases, an increase in spending on promotional activity should increase demand for a product, whilst a reduction in spending on promotional activity should lead to a fall in demand

    • Promotional elasticity of demand determines by how much the level of demand will change when spending on promotional spending is increased or decreased

  • Businesses can use promotional elasticity of demand to determine

    • Whether increased spending on promotion is worthwhile

    • The effect on demand of reducing spending on promotional activity

    • The best use of promotional budgets

Calculating promotional elasticity of demand

  • Promotional elasticity is calculated using the formula:

begin mathsize 16px style Promotional space elasticity space of space demand space equals space fraction numerator percent sign space change space in space quantity space demanded over denominator percent sign space change space in space promotional space spending end fraction space equals space ? space colon space 1 end style 

  • The outcome is expressed as a ratio

    • This shows the percentage by which demand changes with each one per cent change in promotional spending

Worked Example

Yaltrex Industries currently spends $2.4 million each year promoting its range of e-scooters and e-bikes. It is considering running a TV advertising campaign costing $600,000 that it expects will increase annual sales by 30%.

Calculate the promotional elasticity of demand for Yaltrex’s proposed TV advertising campaign.

[3]

Step 1: Calculate the percentage change in promotional spending

Percentage space change space equals fraction numerator space Change space in space spending over denominator Original space spending end fraction space straight x space 100

equals space fraction numerator 600 comma 000 over denominator 2 comma 400 comma 000 end fraction space cross times space 100 space

<img alt=”equals space 25 percent sign” data-mathml='<math style=”font-family:Arial” ><semantics><mstyle mathsize=”16px”><mo>=</mo><mo>&#160;</mo><mn>25</mn><mo>%</mo></mstyle><annotation encoding=”application/vnd.wiris.mtweb-params+json”>{“language”:”en”,”fontFamily”:”Times New Roman”,”fontSize”:”18″,”autoformat”:true}</annotation></semantics></math>’ height=”20″ role=”math” src=”data:image/svg+xml;charset=utf8,%3Csvg%20xmlns%3D%22http%3A%2F%2Fwww.w3.org%2F2000%2Fsvg%22%20xmlns%3Awrs%3D%22http%3A%2F%2Fwww.wiris.com%2Fxml%2Fmathml-extension%22%20height%3D%2220%22%20width%3D%2256%22%20wrs%3Abaseline%3D%2216%22%3E%3C!–MathML%3A%20%3Cmath%20xmlns%3D%22http%3A%2F%2Fwww.w3.org%2F1998%2FMath%2FMathML%22%20style%3D%22font-family%3AArial%22%3E%3Cmstyle%20mathsize%3D%2216px%22%3E%3Cmo%3E%3D%3C%2Fmo%3E%3Cmo%3E%26%23xA0%3B%3C%2Fmo%3E%3Cmn%3E25%3C%2Fmn%3E%3Cmo%3E%25%3C%2Fmo%3E%3C%2Fmstyle%3E%3C%2Fmath%3E–%3E%3Cdefs%3E%3Cstyle%20type%3D%22text%2Fcss%22%3E%40font-face%7Bfont-family%3A’math17f39f8317fbdb1988ef4c628eb’%3Bsrc%3Aurl(data%3Afont%2Ftruetype%3Bcharset%3Dutf-8%3Bbase64%2CAAEAAAAMAIAAAwBAT1MvMi7iBBMAAADMAAAATmNtYXDEvmKUAAABHAAAADRjdnQgDVUNBwAAAVAAAAA6Z2x5ZoPi2VsAAAGMAAAAsmhlYWQQC2qxAAACQAAAADZoaGVhCGsXSAAAAngAAAAkaG10eE2rRkcAAAKcAAAACGxvY2EAHTwYAAACpAAAAAxtYXhwBT0FPgAAArAAAAAgbmFtZaBxlY4AAALQAAABn3Bvc3QB9wD6AAAEcAAAACBwcmVwa1uragAABJAAAAAUAAADSwGQAAUAAAQABAAAAAAABAAEAAAAAAAAAQEAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAACAgICAAAAAg1UADev96AAAD6ACWAAAAAAACAAEAAQAAABQAAwABAAAAFAAEACAAAAAEAAQAAQAAAD3%2F%2FwAAAD3%2F%2F%2F%2FEAAEAAAAAAAABVAMsAIABAABWACoCWAIeAQ4BLAIsAFoBgAKAAKAA1ACAAAAAAAAAACsAVQCAAKsA1QEAASsABwAAAAIAVQAAAwADqwADAAcAADMRIRElIREhVQKr%2FasCAP4AA6v8VVUDAAACAIAA6wLVAhUAAwAHAGUYAbAIELAG1LAGELAF1LAIELAB1LABELAA1LAGELAHPLAFELAEPLABELACPLAAELADPACwCBCwBtSwBhCwB9SwBxCwAdSwARCwAtSwBhCwBTywBxCwBDywARCwADywAhCwAzwxMBMhNSEdASE1gAJV%2FasCVQHAVdVVVQAAAAEAAAABAADVeM5BXw889QADBAD%2F%2F%2F%2F%2F1joTc%2F%2F%2F%2F%2F%2FWOhNzAAD%2FIASAA6sAAAAKAAIAAQAAAAAAAQAAA%2Bj%2FagAAF3AAAP%2B2BIAAAQAAAAAAAAAAAAAAAAAAAAIDUgBVA1YAgAAAAAAAAAAoAAAAsgABAAAAAgBeAAUAAAAAAAIAgAQAAAAAAAQAAN4AAAAAAAAAFQECAAAAAAAAAAEAEgAAAAAAAAAAAAIADgASAAAAAAAAAAMAMAAgAAAAAAAAAAQAEgBQAAAAAAAAAAUAFgBiAAAAAAAAAAYACQB4AAAAAAAAAAgAHACBAAEAAAAAAAEAEgAAAAEAAAAAAAIADgASAAEAAAAAAAMAMAAgAAEAAAAAAAQAEgBQAAEAAAAAAAUAFgBiAAEAAAAAAAYACQB4AAEAAAAAAAgAHACBAAMAAQQJAAEAEgAAAAMAAQQJAAIADgASAAMAAQQJAAMAMAAgAAMAAQQJAAQAEgBQAAMAAQQJAAUAFgBiAAMAAQQJAAYACQB4AAMAAQQJAAgAHACBAE0AYQB0AGgAIABGAG8AbgB0AFIAZQBnAHUAbABhAHIATQBhAHQAaABzACAARgBvAHIAIABNAG8AcgBlACAATQBhAHQAaAAgAEYAbwBuAHQATQBhAHQAaAAgAEYAbwBuAHQAVgBlAHIAcwBpAG8AbgAgADEALgAwTWF0aF9Gb250AE0AYQB0AGgAcwAgAEYAbwByACAATQBvAHIAZQAAAwAAAAAAAAH0APoAAAAAAAAAAAAAAAAAAAAAAAAAALkHEQAAjYUYALIAAAAVFBOxAAE%2F)format(‘truetype’)%3Bfont-weight%3Anormal%3Bfont-style%3Anormal%3B%7D%3C%2Fstyle%3E%3C%2Fdefs%3E%3Ct