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Your firm sells luxury autos, and you have asked the marketing department to develop and stronger brand identity through a new ad campaign
Your firm sells luxury autos, and you have asked the marketing department to develop and stronger brand identity through a new ad campaign. After the campaign has run for 6 months, you hire an economic consultant to study the impact of the campaign on the demand for your autos. The consultant reports that the demand for your cars is now more elastic than it was 6 months ago. Was the new ad campaign successful?
A. Yes
B. No
Expert Solution
The correct answer to the given question is option A. Yes.
Since the consultant has reported that the demand for cars is now more elastic than it was 6 months ago, it can be inferred that the quantity demanded for the luxury autos sold by the firm will be affected more than the changes in its price. Hence, even a little reduction in prices can now translate into relatively significant increase in demand for the luxury autos. Hence, one can conclude that the new ad campaign has been successful.
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