Digital Marketing

Model elasticity: How far can your model stretch earlier than it breaks?

As a marketer, you probably have a pretty good idea of ​​what price elasticity is, especially if you’re an experienced marketer. Let's use this as an introduction to the idea of ​​brand elasticity.

However, if you could use a quick reminder, price elasticity, according to Amy Gallo, editor of Harvard Business Review, is a calculation that marketers use to determine how a change in product price (up or down) will affect demand for it Product affects

Price elasticity is a rear-view mirror metric with which a marketer can recognize the effects on demand for the price change. The formula looks like this:

Beyond the value of accurately measuring a product's price elasticity, it benefits from a broader understanding of how sensitive (or not) a product is to price fluctuations.

This simple understanding of how sensitive an attribute is to the movement of another attribute also forms the core of the concept of brand elasticity, which measures how sensitive consumer preference is to a particular brand when it extends beyond its positioning or extends into new categories.

When I talk to a marketer about brand architecture, brand elasticity is one of the basic concepts that are always involved. For marketers who are not familiar with the term, I share the following example: Imagine a new ice cream brand offered by Exxon Mobile. Crazy, right? Of course it is like this: we all recognize that Exxon Mobile cannot fall into a category that is so far from its own and credible in the category, let alone creating preferences.

This extreme example could be a case of what scientists would call "perfect elasticity". This means that any move away from the oil and gas category is accompanied by a dramatic (in this case negative) change in consumer preference. In other words, the variability is guaranteed.