The concept of elasticity is vital in making decisions about product discontinuation. A product with highly elastic demand is sensitive to changes in price, market conditions, and consumer preferences. If such a product experiences declining sales or profitability, it may be more susceptible to negative market changes, and continuing its production may lead to further losses. In contrast, a product with inelastic demand indicates a consistent consumer need, regardless of changes in external factors. Discontinuing an inelastic product could mean losing a stable revenue stream. Therefore, understanding elasticity helps businesses assess whether declining sales are a result of market dynamics, which might be temporary, or inherent product issues, indicating a need for discontinuation or significant product changes.

Yes, a product can exhibit different elasticities in different markets or segments. This variation often results from differences in consumer preferences, income levels, availability of substitutes, and cultural factors. For instance, a luxury item might be inelastic in a high-income market where it is viewed as a status symbol but elastic in a lower-income market. Businesses need to tailor their marketing strategies to these differing elasticities. In markets where demand is inelastic, firms might focus on premium pricing and brand enhancement. Conversely, in markets with elastic demand, competitive pricing, promotions, and value propositions might be more effective. Understanding market-specific elasticity enables businesses to optimise their product positioning, pricing strategies, and promotional activities, ensuring that they meet the unique needs and responses of each target segment.

The elasticity of demand for a service can differ significantly from that of a tangible product due to the intangible nature of services, the importance of customer experience, and the lack of physical inventory. Services often involve direct customer interaction, customisation, and are consumed at the point of delivery, which can affect their elasticity. For example, essential services like healthcare or public transport may have inelastic demand, as consumers cannot easily find substitutes. Conversely, services like tourism or luxury spas might exhibit elastic demand, being highly sensitive to changes in price or income. Service-oriented businesses must focus on quality, customer relationship management, and reputation to maintain demand, particularly for services with elastic demand. Moreover, pricing strategies might be more flexible and adaptive to market conditions for services, reflecting their varying degrees of elasticity.

Short-term elasticity refers to the immediate response of demand to changes in price, income, or other factors, while long-term elasticity considers the response over a longer period. These differences are crucial for business strategy. In the short term, consumers' ability to switch products or adjust their habits is limited, often leading to inelastic demand. For example, an immediate price increase in a product might not drastically reduce its demand if consumers are temporarily unable to find substitutes. However, in the long term, consumers adjust, explore alternatives, and become more responsive to price changes, leading to more elastic demand. Businesses need to understand these dynamics for strategic planning. Short-term strategies might focus on maximising immediate revenue through pricing, whereas long-term strategies could emphasise product differentiation, customer loyalty, and adaptation to changing market conditions.

Cross elasticity of demand (XED) measures the responsiveness of the demand for a good to a change in the price of another good. It differs from price elasticity of demand (PED), which focuses on how the quantity demanded of a product responds to changes in its own price. XED is particularly important in marketing analysis for understanding the relationships between products, especially substitutes and complements. For instance, if a company observes a high positive XED between its product and a competitor's, it implies that the two products are close substitutes. This insight can influence marketing strategies, such as pricing, product differentiation, and promotional efforts. On the other hand, a negative XED indicates complementary goods, which can lead to joint marketing strategies or bundled pricing. Understanding XED helps businesses anticipate market reactions to competitive pricing and develop strategies to enhance their market position.