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Analysing the profitability trade-off between price discounts and online advertising for Canyon bicycles - the role of advertising elasticities
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Resumo(s)
This study analyses overstock sell-out strategies for COMPANY in the challenging German
bicycle market, comparing price discounts and advertising increase. Elasticity analysis reveals
that price reductions ( = -2.474) significantly impact demand more than advertising ( =
0.086). Both strategies are profitable, but 64% advertising increase is required to match profits
of 1% price discount. While discounts drive immediate revenue, advertising plays a key role in
building long-term customer relationship. The study's findings are specific to the examined
period, and while not universally applicable, they offer a methodology to continually assess and
integrate these concepts into marketing and sales strategies.
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Profitability E-commerce Online advertising Price discounts Bicycle industry DTC Business