Strategic Marketing Exam 1 Practice

Which policy addresses how related products may react to price promotions on another item?

Guardrails on promotion depth/duration Communication of value Cross-elasticities with other products Ensuring alternative channels remain profitable

Correct Answer:

Cross-elasticities with other products

Explanation:

Cross-elasticity of demand between products describes how the price change or promotion on one item affects the demand for other items in the assortment. This concept captures the reactions of related products—whether they are substitutes or complements—when one item goes on a price promo. Understanding these relationships lets a marketer forecast spillover effects, avoid unwanted cannibalization, and optimize the overall promotion strategy across the product family. Other policies focus on promotion governance, messaging, or channel profitability, but they don’t directly address how related products respond to a price change on another item.

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