P&G Case Study

P&G Case Study

Introduction and Alignment

This case illustrates how a company’s pricing policies depend on how consumers respond to price changes.  Your reading will build on your prior knowledge of supply and demand analysis, and will incorporate various forms of elasticity to solidify these concepts from a managerial perspective.

Upon completion of this assignment, you should be able to:

  • Differentiate among price elasticity of demand, income elasticity, and cross-price elasticity.
  • Incorporate biblical and ethical principles into economic theory and practice.


  • Bible
  • Article: The Extravagance of God: http://www.leaderu.com/humanities/fujimura-iamessay2.html
  • Textbook: Economics for Managers

Background Information

A recession can alter consumers’ overall sensitivity to various products and services.  In this particular case, P&G was facing price structure issues that were affecting both standard and premium goods.  Given the elasticity of the product(s), the company needed to develop a new price structure.


  1. Read Chapter 3 in Economics for Managers.
  2. Read the case study “Demand Elasticity and Procter & Gamble’s Pricing Strategies” on page 47 of Economics for Managers.
  3. Based on these facts, answer the following questions:
    1. Should Procter & Gamble use reward or loyalty programs to influence demand and price elasticity for its products?
    2. How would these programs influence current and future demand?
    3. Why would the price elasticity of demand for an individual firm’s product be greater than the elasticity of the overall product market?
  4. Read Luke 7:37-38 and the article “The Extravagance of God” by Makoto Fujimura: http://www.leaderu.com/humanities/fujimura-iamessay2.html
    1. How is price elasticity related to the perfume poured on Jesus’ feet?
  5. Write a 500-word paper answering the preceding questions.
  6. Incorporate a minimum of two sources and your Bible in addition to the text in this assignment.  Your two sources may include scholarly sources, credible newspapers, trade journals, or websites.  Be sure to use OCLS to find these sources.
  7. Use APA formatting for your paper and citations.


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