Relationship between consumer behavior and price elasticity with the participation of case analysis

Abstract

This study systematically investigates four fundamental theoretical models: linear and non-linear demand curve models, marginal utility, price elasticity, and cross-price elasticity, discussing on consumer behavior and commodity pricing. Besides, bridging those classical economic theories and modern marketing strategies: specialty, shopping, convenience, and unsought goods, the paper analyzes the product characteristics in response to the market demand modification. For instance, the non-linear demand curve provides a better explanation of premium pricing tolerance in the specialty, while the cross-price model comes up with a greater illustration of the shopping market (taking “Starbucks” and “Tim Hortons” as examples). Moreover, the unsought market relies on the concave demand curve, connecting the perspective of psychology and situational factors. Based on the implementation of the marketing mix theory(4Ps): Product, Promotion, Place, and Price, an integrated analytical framework was shown with an emphasis on the necessity of contextualized requirements modeling. This research reveals three key limitations in the literature. Possibly, the mismatch between the theoretical assumptions and empirical consumer behavior would arise from missing or inadequate background factors in the analysis, such as geographical and cultural influences, along with the absence of a mathematical formula aligned with the raised assumptions. The outcome optimizes the theoretical system of consumer behavior and provides a theoretical basis for enterprises to develop differentiated pricing strategies.