Management Economics Assessment 1

Management Economics
Assessment 1

Table of Contents
INTRODUCTION...........................................................................................................................3
Description of the business..........................................................................................................3
Identification of Demand and Market Equilibrium.....................................................................4
Indicating demand is more elastic or more inelastic....................................................................8
CONCLUSION..............................................................................................................................12
REFERENCES................................................................................................................................1

INTRODUCTION
Managerial economics is a stream of management which help the companies in solving
their business problems and taking decisions via applying theories and principles of
microeconomics and macroeconomics. The report will critically discuss and apply the various
concepts of economics such as supply, demand, price elasticity etc. with respect to managerial
decision making in Procter & Gamble. Further, the report will also discuss the factors of demand
and price elasticity of demand and their impact on specific product range of company such as
Baby Wipes.
Description of the business
Procter & Gamble (P&G) is a American based multinational consumer goods
corporations which offers wide range of personal health, care and hygiene products to their
national and international customers. The company was founded in 1837 in Ohio whose product
portfolio also included food, snacks and beverages but main product is personal and skin care.
The company is operates in consumer goods industry having around 99000 employees in the
year 2020 with the operating income of US$16.39 billion (Bashir and et.al., 2019). Basically,
P&G operates in all around the world such as in more than 180 countries except the Cuba and
North Korea. The company offers variety of goods and services but the main products of the
company which will be focused in this report is Baby Wipes. It is because Pamper Baby wipes
product of the P&G in the year 2020 has total sales of 18.36 billion and in the year 2019 17.81
billion.
This product has more demand in the market as compared to company's other products
because it relates to the hygiene of the new born baby. The company offers baby wipes products
to the customers which are available on various fragrance and are also thick so that parents can
thoroughly clean their baby without reservations. The reason behind selecting Pampers Baby
Wipes product range offered by P&G company for the present report is that it is necessity
product not luxury (Sinaga and Sinulingga, 2020). This is a necessity product because it remove
the irritants on the baby skin after the regular use of diapers. The products price set by the P&G
company is low i.e., $0.03 per count as it is helpful for them to attract even middle class and
poor people to purchase it for the health and safety of their new born baby.

Link: <https://www.statista.com/statistics/238771/sales-of-procter-und-gamble-by-sector-in-
2009/>
Identification of Demand and Market Equilibrium
Factors that influence the demand of the Baby Wipes products of the P&G company are
as follow: Price of Substitute: The substitute products are the similar products which could be used
for the same purpose by the consumers. P&G's Pamper baby wipes substitute products is
Johnson & Johnson (J&J) baby wipes and the price of the product set by J&J is around
$0.05 per count (Aldaihani and Ali, 2018). In the macroeconomics, the price of the
substitute goods increases than the demand of the similar goods having low price
increases and vice-versa. The price of the substitute product is increasing and the
impact of which the demand of the P&G baby wipes product is also increasing. This
reflect the direct relationship between the substitute products price and own products
demand. It is because, the consumers are getting the same products at low cost in the
market which they prefer more than paying high price.