The idea
A positive cross-price elasticity indicates substitutes; a negative value indicates complements. Income elasticity describes how demand responds to changes in real income: above 1 for luxuries, between 0 and 1 for necessities, and below 0 for inferior goods. Pack types are examples, not permanent categories. Very small daily packs can gain demand when customers trade down, but check the pattern in your own segments.
Use it thoughtfully
- Measure how much competitor price moves hit your volume.
- Shift pack sizes before real incomes fall, not after.
- Track the share of daily packs as an early warning.
An example
ILLUSTRATIVE EXAMPLE: In a Myanmar region where real incomes fall, 30-day pack sales drop while daily-pack sales rise. The team adds a smaller weekly pack before the next quarter.
A question to try
If your customers' real income fell 5% next quarter, which of your packs would grow and which would shrink?
A useful framework is a starting point, not a guarantee. Effects vary with the audience, product and situation. Use truthful evidence, respect customer choice, and test the result.