Orange smoothing line represents elasticity of demand. As we can see, price lower than 1.14 boosts sales significantly, from 64087 up to maximum of 116226 (increase up to 181%). That is why the yellow region on the graph represents promo-pricing. The green area shows regular pricing, with price range from 1.14 to 1.36. With such pricing, the sales would presumably vary in 40653 - 68394 interval. Finally, red zone stands for declining sales and should be avoided. Blue line on this graph is the average non-promo price of Seronade 250ML in past 15 weeks. It equals 1.45. Obviously, it lies in the red zone. To justify the pricing, we compare it with Mercury retailer.

The average non-promo price in Mercury past 15 weeks equals 1.43, which is quite high. Let’s see Mercury price-sales performance and elasticity curve.

The elasticity curve seems strange. Big fluctuations in price-sales dependency can reveal that Mercury relies more on non-price competition and thus the overall demand curve is so elastic. However there is some evidence of “comfort zone pricing”, that being range 1.31 - 1.37 with highest sales 209686 (for Mercury this boost was due to promo price). For Venus this price can be optimal in terms of sales. Also, it is lower than average non-promo price of Mercury. After analyzing Mercury and Venus price stategy, we suggest that Venus keeps price in approzimately 1.1 - 1.4 range to balance sales and margins. But also it is important to focus on non-price competition.