One of the main factors in elasticity is the number of substitutes available for a specific product. If there are many substitutes available, when a firm tries to raise its price, consumers feel like they can substitute for a relatively cheaper product. That’s where firms might turn to advertise. If a firm can make you believe that their product is so unique that an alternative isn’t possible, then they’re able to make their demand more inelastic.
Find an advertisement for a product (and be sure to include it) that’s trying to change its elasticity. Recall, it needs to do one of the following:
Try to make consumers believe that substitution isn’t an option.
Try to make their product more of a necessity vs. a luxury.
Try to make time an issue such that you have to buy their product sooner than later.
Then explain how the ad is trying to achieve any of the goals above. Really (over) emphasize the economic terminology. Make it clear directly how the ad relates to the critical characteristics of inelasticity! Please be VERY CLEAR on which of the traits of INELASTICITY are being used. This is NOT a marketing analysis; emphasize economics!
