Inquiry Response: Paid Promotion Optimization with Low Price Elasticity

Inquiry:

We’re concerned about paid promotion optimization for a brand of products with low price elasticity. Currently we put them on discount when our competitors do. Now we’re wondering if this is the best strategy. How can we improve our data to make better decisions?

Response:

THE BIG IDEAS:

  • Price cross elasticity
  • Price thresholds
  • Not running price promotions

PRICE CROSS ELASTICITY

Price cross elasticity (PXE) measures the likelihood that a consumer will switch between two brands due to price

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