Q2 Managing promotions in seasonal demand products

Now imagine that you are a small ice cream producer that sells its product through a large supermarket chain.

You decide to make a price-promotion during summer. You know that ice cream price demand elasticity is between 1.5-2.0

Q.2.1 What would you expect would happen to total revenues?

Is this a justifiable decision given your answer in Q1?

Q.2.2 What would you expect would happen to total revenues?

The following is Question 1:

Q1 Managing promotions in seasonal demand products Ice cream has a strong seasonality with peak demand in the summer and another smaller demand during Christmas period.

Q1.1 Draw a supply and demand framework to graphically represent changes: peak demand vs off peak demand.

Q1.2 What happens to price and quantities in the peak demand period?