Advertising Elasticity Of Demand : with importance in real world

The presentation focusses on explaining what exactly is advertising elasticity of Demand , its importance in real world explained through graphs

1. Advertising Elasticity Of Demand : ABM – 102 Seminar & Group Discussion Submitted By : T.Guru Aarat 142063

2. What is Elasticity of demand ? Elasticity of demand refers to the degree of responsiveness of demand of a commodity to change in any of its determinants. Its is a measure of how sensitive the quantity demanded of a commodity is to change in any of the factors influencing demand.

3. Types Of elasticity of demand : There are 4 types of elasticity of demand : 1. Price Elasticity of Demand 2. Cross Elasticity of Demand 3. Income Elasticity of Demand 4. Advertising Elasticity of Demand

4. Advertising Elasticity of Demand (AED) : Advertising Elasticity of demand refers to the proportionate change in demand of a commodity due to proportionate change in advertising expense. Advertising elasticity is a measure of an advertising campaigns effectiveness in generating sales. Formula : Proportionate change in Demand for product Proportionate change in Advertising expense AED =

5. Types Of AED: Perfectly Elastic Advertising elasticity Perfectly Inelastic Advertising Elasticity Highly Elastic Advertising Elasticity Unitary Elastic Advertising Elasticity Highly Inelastic Advertising Elastcity

6. Perfectly elastic AED y x Perfectly elastic curve D D When the demand for a product changes –increases or decreases even when there is no change in advertising expense. Advertising Expense demand

7. Perfectly inelastic AED: demand D D Perfectly inelastic curve Y X When a change in advertising expense , doesn ’ t lead to any change in quantity demanded , it is known as perfectly inelastic demand. Advertising Expense

8. Relatively elastic AED: Relatively elastic curve Advertising Expense demand x y D D When the proportionate change in demand is more than the proportionate changes in advertising expense , it is known as relatively elastic demand .

9. Unitary elastic AED: Unitary AED y x demand D D When the proportionate change in demand is equal to proportionate changes in advertising expense price , it is known as unitary elastic demand. Advertising Expense

10. Relatively inelastic AED: Relatively inelastic demand curve X O Y demand D D When the proportionate change in demand is less than the proportionate changes in advertising expense , it is known as relatively inelastic demand Advertising Expense

11. Nature of the products and time factor Timing of the promotional activities Product stage Promotional activities of the competitors Volume of advertising expense incurred Non Advertising factors Factors affecting AED :

12. Importance of AED: Its helps the management in deciding whether the outlay on advertisement should be increased , decreased or maintained at the present level. Its helps the management in studying the effect of advertisements on sales revenue. Advertising elasticity also helps in evaluating the effectiveness of various media of advertisement.

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