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Brand Elasticity: How Far Can Your Brand Stretch Before It Breaks?

MarketingProfs 29 Apr 2020 02:00

As a marketer, especially if you're a senior marketer, you likely have a pretty good idea of what price elasticity is. So let's use that as an introduction to the idea of brand elasticity.

If you could use a quick reminder, however, price elasticity is, according to Harvard Business Review Contributing Editor Amy Gallo, a calculation marketers use to determine how a change in a product's price (up or down) affect demand for that product.

Price elasticity is a rear-view mirror metric that allows a marketer to know the impact on demand after the change in price. Its formula looks like this:

Beyond the value of precisely measuring a product's price elasticity, there is benefit from a broader understanding of just how sensitive (or not) a product is to price swings.

That simple understanding of how sensitive one attribute is to the movements of another attribute also lies at the core of the concept of brand elasticity, which gauges how sensitive consumer preference is for a certain brand when it stretches beyond its positioning or expands into new categories.

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Amy GalloExxon Mobile