Price elasticity of demand


Price Elasticity

As a District Manager of a large grocery chain, I would put all Valentine's Day merchandise on sale starting with items specific to the holiday such as heart shaped candy, pillows, stuffed animals, chocolates, balloons, flowers, or stationary. Following the holiday, the reason for this is because these items are very specific to the holiday and demand has decreased to regular pre-holiday sales. Using the price elasticity of demand tool, managers can evaluate how much to decrease the prices for the decrease in demand of holiday merchandise (Kenton, 2018). Items such as these are very "elastic" meaning that more customers purchase these items before and during Valentine's Day for their loved ones. It makes sense to increase the prices prior to the holiday when demand has increased for customers in preparation of the occasion.

However, once the holiday and demand has dropped, managers need to get rid of the inventory with some profit by encouraging customers to purchase the remaining inventory by putting it on sale.

Kenton, W. (2018, October 22). Price Elasticity of Demand. Investopedia

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Microeconomics: Price elasticity of demand
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