Presentation on

Advertisement elasticity of demand on

sale of two wheeler

Prepared by: Nidhi Maheshwari

Submitted to: Swati S
Dhaval Modi
Vatsal Pastagiya
Mr. Vikas Singh Abdul Salot
Shreyash Doshi
Focus
 Definition of Elasticity
 Calculating Elasticity
 Introduction of Advertising
 Advertisement Elasticity of Demand
 Calculation Of AED
 Impact of AED Value
 Media Alternatives
 Types of promotion
 Advertisement
 Advertisement Elasticity
Definition of elasticity
 The responsiveness of demand to changes in an underlying factor,
such as price, income, price of related products, or advertising.

 Percentage change in quantity demanded resulting from 1%

increase in price of the item.

Alternatively,

%_change_in_quantity
_demanded
%_change_in_price
Calculating Elasticity
Calculating Elasticity cont…

 Arc Approach:
Elasticity={[Q2-Q1]/avgQ}/{[P2-P1]/avgP

 % change in qty = (1.44-1.5)/1.47 = -4.1%

 % change in price = (1.10-1)/1.05 = 9.5%
 Elasticity=-4.1%/9.5%
=-0.432
Calculating Elasticity cont…

 Point approach:
Elasticity={[Q2-Q1]/Q1}/{[P2-P1]/P1}

% change in qty = (1.44-1.5)/1.5= -4%

% change in price = (1.10-1)/1= 10%
Elasticity=-4%/10%=-0.4
Introduction of advertising
• Advertising is a form of communication that typically attempts to
persuade potential customers to purchase or to consume more of a
particular brand of product or service.

• Advertisements are seen on the seats of shopping carts, on the walls

of an airport walkway, on the sides of buses, and are heard in
telephone hold messages and in-store public address systems.

• Advertisements are often placed anywhere an audience can easily or

frequently access visual, audio and printed information.
Advertisement Elasticity of Demand

 Advertising elasticity of demand is the measure of

how advertising affects the demand of a certain
product. It is the percentage change in the sales of
the advertised product as opposed to the percentage
change in its advertising expenses.
Calculating Elasticity

 Formula
 % change in demand
% change in advertising expenditure

 The calculation of the AED will produce a

value. This value will indicate some of the
characteristics of the goods.
Impact of AED Value
 A value over 1 implies a relatively elastic demand. In
other words, an increase in the level of advertising
will cause a greater increase in the demand for the
good.

 A value less than 1 implies a relatively inelastic

demand. In other words, an increase in the level of
advertising will cause a proportionately smaller
increase in the demand for the good.
Media Alternatives

• Mass Media aimed at total markets:

Newspapers
Television
• Specific market media forms:
Radio
Magazines
Direct mail
Internet
Media Alternatives

• Miscellaneous Media
Yellow Pages
Outdoor advertising
Electronic information terminals
Specialty firms
Shopping guides
Types of Promotion
• Sales Promotion involves the use of media and non-media
marketing pressure applied for a predetermined, limited period
of time as the level of consumer, retailer, or wholesaler in order
to stimulate trial, increase consumer demand, or improve
product availability.
• Publicity is non-paid-for communications of information about
the company or product, generally in some media form.
• Personal Selling involves a face-to-face interaction with the
consumer with the goal of selling the consumer merchandise or
service.
Advertisement

DHRU Automobiles SIDDHI Automobiles

 Free service  Free service
 Discount coupon  No discount coupon
 Scheme  Less scheme
 Place  Place
 Passport
Advertisement elasticity

DHRU Automobiles
Month 2007 SELL
(Rs.)
APR—JUN 150000 1459

JULY—SEP 150000 1380

OCT—DEC 150000 1706

JAN—MAR 150000 1469

TOTAL 600000 6014

Advertisement elasticity cont…

DHRU Automobiles
Month 2007 SELL 2008 SELL
(Rs.) (Rs.)

APR—JUN 150000 1459 200000 1520

JULY—SEP 150000 1380 200000 1444

OCT—DEC 150000 1706 200000 1869

JAN—MAR 150000 1469 200000 1505

TOTAL 600000 6014 800000 6338

Advertisement elasticity cont…

SIDDHI Automobiles
Month 2007 SELL
(Rs.)

APR—JUN 100000 1032

JULY—SEP 100000 1134

OCT—DEC 100000 1309

JAN—MAR 100000 1102

TOTAL 400000 4577

Advertisement elasticity cont…

SIDDHI Automobiles
Month 2007 SELL 2008 SELL
(Rs.) (Rs.)

APR—JUN 100000 1032 150000 1095

JULY—SEP 100000 1134 150000 1200

OCT—DEC 100000 1309 150000 1500

JAN—MAR 100000 1102 150000 1200

TOTAL 400000 4577 600000 4995

THANK YOU