6 assignments

CLASSMATE 1 A. An increase in demand can result in an increase in a firm’s overall revenue; increasing demand results in price increases for a given quantity of a product or service. Firms can increase consumer demand by increasing the size of the market for their respective products and services (Farnham, 2013, p.26). Some of the ways firms attempt to increase the size of the market they serve is through expansion into other geographical areas, along with attracting consumers outside of the typical demographics they serve. Likewise, firms continuously expand overseas to appeal to untapped markets. Many firms like General Motors and Nike have expanded into areas with large populations that have increasing incomes like China in order to reach new areas that have potential for expansion in order to stimulate demand (The Most Popular American Companies in China, 2016). Firms also try to reach out to demographics they do not adequately serve; NASCAR with young drivers like Bubba Wallace, and team owners that include former NBA players is hoping to increase its appeal to more minority viewers and fans, and thus increase the size of the market for the respective demographic. B. A Firm that successfully builds brand loyalty for its products and services can reduce the price elasticity of demand for those respective products and services. If consumers are loyal to certain brands the decreased elasticity of demand can in essence, increase overall revenue when a firm raises its prices. Lakshman Krishnamurthi and S. P. Raj argue that customers who are loyal to a brand will be less price sensitive in their respective choice of brand than customers who are not loyal (Krishnamurthi & Raj, 1991). Krishnamurthi and Raj further argue that this decreased elasticity is only with respect to the choice of a brand and does not necessarily correspond with the quantity of purchase (Krishnamurthi & Raj, 1991). The argument presented by Krishnamurthi and Raj is consistent with the framework of a downward sloping demand curve, which notes that as we move up the curve there is a reduction in quantity demanded. The magnitude of this notion regarding a lesser elasticity of demand being derived from brand loyalty is likely subject to the respective product or service. It is reasonable to assume that although the elasticity of demand for the product of gasoline is relatively inelastic, brand loyalty with respect to gasoline is most likely less significant when compared with other products or services that have more variability or differentiation between brands. Lastly Edward Ramirez & Ronald E. Goldsmith note that fostering brand loyalty can not only reduce the price elasticity of demand for a product but can also contribute to the sustained profitability and longevity of a firm (Ramirez & Goldsmith, 2009). =========================================================== CLASSMATE 2 As a nursing home administrator, one of the challenges that we face is creating a demand for our nursing services. Without a demand or need for long term care or rehab services, then we would not be in business. Shifting the demand curve outwards refers to an increase in demand. There are many things that nursing homes can do to stimulate demand such as addressing tastes and preferences, lowering prices, increasing the number of consumers or decreasing substitute goods (Farnham, 2019, p 51). Getting consumers to acquire a taste and preference for long term care and rehab facilities will be extra challenging this year due to COVID-19 and the media’s coverage on nursing homes during the pandemic. People are scared of nursing homes and the risk of their loved ones acquiring the virus. Another reason that it would be challenging are the visitation ban in nursing homes due to the virus. Families prefer to see their loved ones even if there is a risk in contracting and spreading COVID-19. Our facility currently charges $585 a day for nursing care. This includes room and board, medications, treatments, and meals. We could potentially reduce this amount down to shift the demand curve outwards. The number of consumers are expected to increase as the baby boomers are reaching retirement age. The increase in consumers would lead to the increase in demand. If a firm successfully builds customer loyalty for its products, the elasticity of the product decreases. This means that even if the firm increases their prices, the sales might fall slightly but it would be minimal. Even though there are substitutes in the market for the firm’s market, the customer’s brand loyalty would still encourage the customer to purchase the brand name item even for a higher cost. (Farnham, 2019, p 78). Ensuring that a nursing home has brand loyalty will take time. People want to have a positive care experience for their loved ones which will then assist us in spreading the word about why our facility is superior to other facilities. Another way that we can increase brand loyalty is by implementing a loyalty program similar to hotel’s loyalty programs. For example, staying at one of our buildings could result in free hair services, upgraded private rooms, or free night stays. We could also break the mold of what a typical nursing home or hospital experience is and give the clients more of a hotel experience. Since typically no one wants to go to a nursing home or hospital because that means they are sick, we can change their mind set that this is a mini vacation. We can upgrade linens, offer excursions, and upgrade décor and meals to enhance their experience.