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Yoghurt vs. Milk: Price Elasticity of Demand


The selected product for this discussion is yogurt. Many companies in the dairy and food sectors manufacture and market it to different customers. Most of the firms consider the importance of presenting various flavors to meet the changing demands of different consumers, such as vanilla, pineapple, and strawberry. The first reason for selecting this product is because a customer would purchase it frequently to supplement his or her diet (Farnham, 2014). The second one is that yoghurt remains available to many individuals in different parts of the world. The third reason is that it has a high price elasticity of demand in different markets. Consequently, businesspeople who consider each of these aspects will make informed decisions for producing and delivering yoghurt to more potential buyers and maximize their profits.

Major Determinants of the Price Elasticity of Demand of Yoghurt

Price elasticity of demand is a powerful tool for understanding customers’ responsiveness to changes in pricing for specific products. Several determinants of these attributes are worth considering for yoghurt. First, the available substitutes in the market would dictate the manner in which potential buyers react to the slightest change in the offered retail price (Farnham, 2014). Due to the presence of similar goods or options, the price elasticity of demand for yoghurt would be high. The second factor for the selected product is that of the income level of the identified customer. Individuals with low salaries and wages would remain sensitive and may decide to buy other brands in the market. For those who have considerable income the change in the price might not have huge implications on the purchasing decisions they make. The third determinant that marketers and firms should take seriously is the targeted period through which the price changes. In the case of yoghurt, the greatest number of consumers would notice such adjustments immediately and consider the need to buy the substitutes available in the market (Agarwal, 2020). Potential consumers will be keen to identify the rate of change and how it might affect their interests and experiences (Farnham, 2014). The fourth major determinant is whether yoghurt is a necessity or a luxury good. The situation with this product is that many people would not consider it as a primary need. Such individuals will avoid purchasing yoghurt if marketers decide to increase the current price.

Comparison of Yoghurt to Milk Price Elasticity of Demand

The most significant determinant for the selected product is that of the presence of substitutes in the market. Milk can become the best alternative to yoghurt in different regions and influence consumers’ purchasing decisions accordingly. The approximated price elasticity of demand for it would be around -0.8. As can be seen in the presented table, the value for milk would be around 0.59 (Farnham, 2014). From this observation, it is evident that any slight increase in the price for yoghurt could compel more people to start purchasing milk since it has a lower price elasticity of demand. The best recommendation is for manufacturers of yoghurt to consider the most suitable approaches to reduce prices in order to attract more customers and maximize sales. Such a strategy will eventually result in additional profits and make the selected firm more successful (Rezaee et al., 2015). These attributes should, therefore, guide more businesspeople to propose informed decisions and improve the level of sales.


Agarwal, P. (2020). Price elasticity of demand (PED). Intelligent Economist. 

Farnham, P. G. (2014). Economics for managers (3rd ed.). Pearson Education.

Rezaee, S. A., Oey, M., Nevejan, C., & Brazier, F. (2015). Participatory demand-supply systems. Procedia Computer Science, 44, 105-114.

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