Use the concept of demand price elasticity to explain why grocery store items are often available to shoppers who have “coupons” clipped from local newspapers at a lower price than they are available to shoppers who don’t have coupons.
Demand price elasticity is a measure that helps us understand how sensitive the quantity demanded of a good or service is to changes in its price. Goods with a high price elasticity of demand are more responsive to price changes, leading to larger changes in quantity demanded. On the other hand, goods with a low price elasticity of demand are less responsive to price changes, resulting in smaller changes in quantity demanded.
When it comes to grocery store items and coupons, we can apply the concept of demand price elasticity to explain why items are often available at a lower price to shoppers with coupons compared to those without coupons.
Shoppers who clip and use coupons are generally more price-sensitive consumers. They actively search for discounts and are willing to take the time to cut out coupons from newspapers. These consumers are highly responsive to changes in price since they are actively seeking savings. Consequently, they tend to have a high price elasticity of demand for grocery store items.
On the other hand, shoppers who do not have coupons or do not use them are typically less price-sensitive consumers. They may prioritize convenience over seeking out discounts or may be less aware of the available coupons. These consumers have a lower price elasticity of demand for grocery store items as they are less likely to adjust their purchasing behavior based on price changes.
Retailers recognize this difference in price elasticity of demand between coupon users and non-users. By offering lower prices to coupon users, they attract more price-sensitive shoppers who are likely to purchase more quantities of goods. This strategy helps grocery stores increase sales volume, clear excess inventory, and potentially attract new customers who may become regular shoppers.
In summary, grocery store items are often available at a lower price to shoppers with coupons because these consumers tend to be more price-sensitive and have a higher price elasticity of demand compared to those without coupons. Retailers leverage this insight to target price-sensitive shoppers and stimulate greater sales.