LAW 122 Lecture Notes - Lecture 2: Product Differentiation
24 Mar 2016
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Utilitarian: helps solve problems and accomplish tasks means to an end, rational explanation why a product is purchased, microwaves, personal computers. Hedonic: experience and the emotions associated with the product, designer clothes, luxury watches. Total quantity sold: q = f(p,w,x, z) q=quantity sold, p=price and w,x,z are other characteristics. Elasticity represents market sensitivity to changes in price or other characteristics: q = -3p + 2w. Total market sales and sales within market segments. Relatively elastic small changes in price result in large change in demand. Relatively inelastic large changes in price result in small changes in demand. The inner reasons or driving forces behind human action as consumers are driven to address real needs. Human motivations are oriented toward two key groups of behaviour: homeostasis the body naturally reacts in a way so as to maintain a constant, normal bloodstream, self-improvement changing one"s current state to a level that is more ideal.
