Importance of PED for firms: Unilever
https://www.theguardian.com/business/2023/jul/25/unilever-marmite-dove-maker-profits-price-rises
https://www.bbc.com/news/business-66299138
British MNC that owns companies such as Ben & Jerry’s, Magnum and Dove.
Main data:
● It increased prices by nearly 10%, while the volume of goods sold globally dropped by 0.2%.
● Pre-tax profits rose 21% in the first six months of 2023.
● Their profit margin (calculated after taking away all costs of doing business) was 17.1%
higher than the previous year.
● Sales volumes largely flat → large rise of prices charged and a proportionately smaller drop in
quantity demanded.
Equity argument:
● Greedflation → Unilever has been accused of using high inflation to increase their profits.
● “The cost of living is proving profitable for this global giant, with full-year underlying sales
growth expected to beat forecasts.”
Evaluation:
● PED is however not the only or most important factor for Unilever in its pricing decisions, as
it is watchful of the report earning results of Rivals P&G and Nestle.
Conclusion: Unilever’s goods are largely price inelastic and the firm has benefited (higher revenues)
from charging a higher price.
https://www.theguardian.com/business/2023/jul/25/unilever-marmite-dove-maker-profits-price-rises
https://www.bbc.com/news/business-66299138
British MNC that owns companies such as Ben & Jerry’s, Magnum and Dove.
Main data:
● It increased prices by nearly 10%, while the volume of goods sold globally dropped by 0.2%.
● Pre-tax profits rose 21% in the first six months of 2023.
● Their profit margin (calculated after taking away all costs of doing business) was 17.1%
higher than the previous year.
● Sales volumes largely flat → large rise of prices charged and a proportionately smaller drop in
quantity demanded.
Equity argument:
● Greedflation → Unilever has been accused of using high inflation to increase their profits.
● “The cost of living is proving profitable for this global giant, with full-year underlying sales
growth expected to beat forecasts.”
Evaluation:
● PED is however not the only or most important factor for Unilever in its pricing decisions, as
it is watchful of the report earning results of Rivals P&G and Nestle.
Conclusion: Unilever’s goods are largely price inelastic and the firm has benefited (higher revenues)
from charging a higher price.
