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ECONOMICS PROJECT ON “PRICE ELASTICITY OF DEMAND” FOR PIZZA Group members: AASHIT PRAKHAR (14003) ANKUR KIMTANI (14014) DEV DUGGAL (14019) RASHMI RANJAN (14050)
| Date post: | 15-Nov-2014 |
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ECONOMICS PROJECTON
“PRICE ELASTICITY OF DEMAND” FOR PIZZA
Group members:
AASHIT PRAKHAR (14003)
ANKUR KIMTANI (14014)
DEV DUGGAL (14019)
RASHMI RANJAN (14050)
OBJECTIVE
TO ANALYSE THE PRICE ELASTICITY OF DEMAND FOR PIZZA
SCOPE- TO KNOW THE BEHAVIOUR OF THE CONSUMER
WHEN PRICE OF A PIZZA INCREASES OR
DECREASES.
PRICE ELASTICITY OF DEMAND
The change in the quantity demanded of a product due to change in its price is called price elasticity of demand.
Price elasticity of demand = Percentage change in Quantity demanded
of x/Percentage change in Price of x
ABOUT PIZZA
•Pizza is an emerging fast food in Indian urban areas.
•With the arrival of branded pizza such as Domino's and Pizza Hut in early mid-1990s, it has reached almost all major cities in India by 2013.
•The Indian organized pizza market will surge more than 27% during the year 2012-2015.
SEGMENTATION
Age up to 25 years(COLLEGE) Middle income group(D-MART) Health conscious(GYM) Professional employees(IT PARK) Entrepreneurs(SHOPKEEPERS IN
BAVDHAN) Dominos in residential
area(BAVDHAN) Dominos in commercial
area(HINJEWDI)
CATEGORY 1 UP TO 25
NO OF PERSO
N'
Consumption per month
WHEN PRICE INCREASE BY
10%BY
20%BY
30%
WHEN PRICE DECREASE
BY 10%BY
20% BY 30%
1 4 4 1 0 4 4 5
2 5 5 4 4 5 6 6
3 3 2 2 1 5 6 7
4 5 4 3 3 4 4 5
5 2 1 1 0 1 1 1
6 3 3 2 1 4 5 6
7 2 1 1 1 2 3 4
8 2 2 2 2 2 2 2
9 1 1 1 1 2 2 2
10 2 1 1 1 2 2 2
Total 29 24 20 14 32 35 40
% INCREASE IN PRICE
DECREASED DEMAND
% CHANGE
IN DEMAND ELASTICITY =%CHANGE IN QUANTITY
DEMANDED/%CHANGE IN PRICE
10%24/29*100=8
2% 18% 18%/10%=1.8
20%20/29*100=6
9% 31% 31%/20%=1.55
30%14/29*100%=
48% 52.00% 52.5/30.5=1.73
%
DECREASE IN
PRICE INCREASED
DEMAND
% CHANGE IN
DEMAND ELASTICITY =%CHANGE IN QUANTITY DEMANDED/%CHANGE IN PRICE
10%32/29*100=
110% 10% 10%/10%=1
20%35/29*100=
121% 21% 21%/20%=1.05
30%40/29*100=
138% 38% 38%/30%=1.26
elasticity when price increase byelasticity when price decrease by
Category 10% 20% 30% 10% 20% 30%
1Age- up to 25 1.8 1.55 1.73 1 1.05 1.26
2Middle income Group 2.5 1 1.2 2.2 1.1 1.16
3health Conscious 1.5 1.25 1.16 1 1.5 1.83
4Professional Employees 1.1 0.87 1.16 1 0.65 0.7
5Entrepreneur 1 1.5 1.4 1.1 1 1
6Dominos in Residentional Area 1.8 1.6 2.7 2.7 2.7 1.2
7Dominos in Commercial Area 1.8 1.6 1.6 0.4 1.4 1.76
Elasticity Index for Both Situations ( When price increase & when price decrease)
CATEGORY PRICE INCREASE BY 10%
1 1.8
2 2.5
3 1.5
4 1.1
5 1
6 1.8
7 1.8
0 1 2 3 4 5 6 7 80
0.5
1
1.5
2
2.5
3
Series1Linear (Series1)
SEGMENTS
ELA
STIC
ITY
ANALYSIS :
FOR 10% INCREASE IN PRICE (DEMAND DECREASES)
Highest price elasticity is of Middle income group.
Lowest price elasticity is of entrepreneurs.
CATEGORY PRICE DECREASE BY 10%
1 1
2 2.2
3 1
4 1
5 1.1
6 2.7
7 0.4
0 1 2 3 4 5 6 7 80
0.5
1
1.5
2
2.5
3
Series1Linear (Series1)
SEGMENTS
ELA
STIC
ITY
ANALYSIS :
FOR 10% DECREASE IN PRICE (DEMAND INCREASES )
Highest price elasticity is of dominos located in residential areas.
Lowest price elasticity is of dominos in commercial areas.
CATEGORY PRICE INCREASE BY 20%
1 1.55
2 1
3 1.25
4 0.87
5 1.5
6 1.6
7 1.6
0 1 2 3 4 5 6 7 80
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
Series1Linear (Series1)
SEGMENTS
ELA
STIC
ITY
ANALYSIS FOR 20% INCREASE IN PRICE(DEMAND DECREASES)
Highest price Elasticity is for dominos located in commercial & Residential areas.
Lowest price Elasticity is for Professional Employees.
CATEGORY PRICE DECEASE BY 20%
1 1.05
2 1.1
3 1.5
4 0.65
5 1
6 2.7
7 1.4
0 1 2 3 4 5 6 7 80
0.5
1
1.5
2
2.5
3
Series1Linear (Series1)
SEGMENTS
ELA
STIC
ITY
ANALYSIS FOR 20% DECREASE IN PRICE(DEMAND INCREASES)
Highest price Elasticity is for Dominos located in Residential Area.
Lowest price Elasticity is for professional persons.
CATEGORY PRICE INCREASE BY 30%
1 1.73
2 1.2
3 1.16
4 1.16
5 1.4
6 2.7
7 1.6
0 1 2 3 4 5 6 7 80
0.5
1
1.5
2
2.5
3
Series1Linear (Series1)
SEGMENTS
ELA
STIC
ITY
ANALYSIS FOR 30%% INCREASE IN PRICE(DEMAND DECREASES)
Highest price elasticity is for Dominos located in Residential Area.
Lowest price elasticity is for Health Conscious persons & Professional persons.
CATEGORY PRICE DECREASE BY 30%
1 1.26
2 1.16
3 1.83
4 0.7
5 1
6 1.2
7 1.76
0 1 2 3 4 5 6 7 80
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
Series1Linear (Series1)
SEGMENTS
ELA
STIC
ITY
Analysis For 30% decrease in price(demand increases)
• Highest price Elasticity for Health Conscious persons.
• Lowest is for professional Employees
CONCLUSIONInferences- THE HIGHEST PRICE ELASTICITY IS FOR
THE DOMINOS LOCATED IN THE RESIDENTIAL AREAS.
THE LOWEST PRICE ELASTICITY IS FOR THE PROFESSIONAL EMPLOYEES.
THANK YOU
