Economics: Managing During Recession

Imagine that you are part of the marketing team of the product X at company ABC, which aims at selling this product in the domestic as well as global markets. You are preparing a marketing strategy for this product in the second half of 2011. Define the properties of your product and the target markets by using the micro and macroeconomic concepts that we learned in lectures, which will be used as an input for your marketing strategy. In particular address the following issues:

a. What are the alternative scenarios with regards to the costs of production (marginal costs like labor costs, raw materials, energy)? Consider the macroeconomic expectations for the second half of 2011 and different scenarios about the macroeconomic developments and the course of the recession.

b. What type of a good or service is X? What is the price and income elasticity of your product? What is the cross price elasticity with respect to complementary and substitute products?

c. What is the market structure? What are the possible strategies of your competitors? What will be your strategy with respect to your competitors?

d. Which market segments and different pricing strategies can you imagine?

e. Think of the developments in demand in different markets domestically and globally. How will demand develop in these markets? What is the effect of the recession on the demand for your product? How could government policies in different markets affect the demand for your product?

f. Prepare different scenarios about the developments in the currency markets and their effect on the price competitiveness of your company.