WWW.POTATOGROWER.COM 11
– A Closer Look at the Value of –
PRICE ELASTICITY
is the value that helps determine
the relationship between a change
in the quantity demanded of a
particular good, and a change
in its price.
1
Like in golf, the lower
the score the better.
LOWEST
vulnerability to
competitive pricing.
HIGHEST
potential for increased
profit margins.
THE STUDY FOUND THAT IDAHO
®
RUSSETS
are much less elastic than russet potatoes from
elsewhere. This means that when the price goes up,
the resulting lost volume is significantly less
than non-Idaho® Russets.
THE FINDINGS SUGGEST
that retailers don't need to discount
Idaho® Russets to the same degree as non-
Idaho® Russets for fear of a decline in volume.
INCREASED PRICE
STABLE DEMAND/VOLUME
!
$
1
http://www.investopedia.com/terms/p/priceelasticity
Study Info provided by:
The study was conducted using IRI syndicated data
Category: Potatoes
Timeframe: 104 weeks ending 4/17/2016
8 Regions and Total U.S.
Level of Detail: Weekly data broken out by variety and pack
EQ Volume = Lbs
Timothy Richards, Ph. D. with Badger Metrics, LLC using his proprietary price elasticity model provided the statistical results
reported.
Category Partners, LLC, in concert with Dr. Richards, provided the conclusions and takeaways reported.
SETH PEMSLER
Vice President,
Retail and International Programs
Idaho Potato Commission
"The fact is that even if
you pay 10 cents per bag more
for Idaho®
Russets, you can charge
20 cents per bag more at retail."
0.0
0.5
1.0
1.5
2.0
.55
1.59
IDAHO
®
NON-IDAHO
®
BASED ON 5lb BAGS
of russet potatoes
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®
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A RECENT STUDY BY ARIZONA STATE UNIVERSITY LOOKED AT
VALUE AND PRICE ELASTICITY
IDAHO
®
POTATOES
