Case s tudy : Fitness price elasticity

1. Case study : Fitness price elasticity A leading US retailer ran a test for five weeks in June where they varied price of items in the Fitness department, most of this pricing was not advertised, i.e. price tags were simply changed in the stores each week. The client wanted to know the impact of this price change. • The client wanted to know the impact of price changes on the following metrics: • # of Units sold • AUR (Average unit revenue) • Amount of Overrides given • Purchase Behavior (Use of coupons etc) • Absolutdata also validated somekey Hypotheses: • The % of transactions with an override should decrease as the price goes down • Lower ticket items should sell more for similar reduction in prices • Unit sales for weeks with AD’s would be higher than the Non AD weeks • The analysis was further broken down into3 price categories: • Low Ticket Items ( Price < $500) • Mid Ticket Items (Price $500 - $1000) • High Ticket Items (Price > $1000) Units sold per week Sales per week ($) Reality Price as % of Now Price