CVS business proposal Essay Example

will follow suit.

Price elasticity refers to how much consumers' willingness to purchase a product is affected by changes in price (
). According to Jennifer Tuck (Chron Small Business, 2013), the principle of demand jurisprudence states that an increase in price leads to a decrease in quantity demanded. Price elasticity of demand measures this decline in quantity demanded. Elastic demand indicates that consumers are highly responsive to price changes for non-essential products or those with numerous substitutes. This means that customers of these products are not very sensitive to changes in price. The elasticity of demand for pharmaceutical products reveals that they cannot be classified as necessities (Tom Vander Beken, 2007).Although medicine is crucial for the prevention and treatment of illnesses, its distinct qualities and lack of easy substitutes suggest otherwise. In markets with numerous alternatives or substitutes, changes in price can easily influence demand for pharmaceutical goods. Therefore, it is important for pharmaceutical manufacturers to determine the level of price elasticity in order to gain a better understanding of their market (Brent L. Rollins, Matthew Perri, 2013). To ascertain levels of profit maximization, an analysis can be conducted where marginal revenue equals marginal costs. Instead of considering profit across all sales levels, this analysis concentrates on total revenue and total variable costs. The examination also involves analyzing marginal revenues and marginal costs at each sales level to identify any variations (Huter, 2012, p.2). When assessing its business operations, CVS must consider various factors such as pricing strategies, competitors, consumer demands,and suppliers.Price strategies that CVS can contemplate include closeouts,discounst product bundle pricing ,penetration pricing , geographical pricing,and membership or trade pricing( Kimmons,n.d.).CVS can optimize its profits

by implementing geographical pricing and adjusting prices based on regional demographics. In addition, they can promote unique or new products through trial price drops, making incursion pricing the most effective strategy in this case. To sell seasonal goods without losses, closing out sales and roll-up pricing are useful tactics.

Non-pricing strategies such as enhanced service quality, longer hours, and advertising should also be considered. Advertising helps attract consumers' attention and increases brand awareness. Longer business hours provide more customer service opportunities and allow for serving more clients. Implementing automated confirmation and distribution systems can improve service quality in the pharmacy sector, where more pharmacists can provide better customer service and patient advice.

The retail pharmacy industry faces high entry barriers due to high costs. However, CVS benefits from economies of scale through its supplier relationships, allowing them to purchase larger quantities at lower rates. This enables them to lower prices while still maintaining profitability.

Recent policies implemented by policymakers in advanced economies have led to improved global economic conditions. The IMF's World Economic Outlook report shows that financial markets have rebounded and fiscal stability has improvedAccording to the IMF (Thomas Helbling, 2013), global GDP growth is projected to be 3.3% in 2013, similar to the previous year's growth. However, it is expected to increase to 4% in 2014. The Pharmaceutical Industry has a significant role in the US economy and continues to grow rapidly, which also impacts global pharmaceutical industries. Experts emphasize the influence of media on health awareness and its effect on the US pharmaceutical industry.

Currently, the US economy is experiencing a mid-cycle expansion phase with indicators showing increasing economic growth. The strong performance in equity markets

can be attributed to growth in domestic energy and housing markets as well as ongoing employment growth. Resolving the financial cliff earlier this year prevented further harm and allowed for continued growth.

The US Leading Indicators index supports the idea that economic growth remains intact, as it includes ten economic components predicting GDP growth. However, concerns arise from unexpected impacts of payroll tax changes and monetary reduction through repossession.

Interest rates for consumer and business loans are lower than they have been in previous years due to reduced government credit exchanges like FFR and Prime rate. For example, Prime rate currently stands at 3.25%, resulting in a 10% increase in consumer loans but limited availability of business loans compared to previous years.Despite concerns, customers are starting to purchase again and are content with the current state of the economy. Given this favorable market condition, CVS Pharmaceutical can boost its market share by implementing successful marketing strategies. The market structure of CVS Pharmacy is an oligopoly, making it challenging for new competitors to enter successfully. Price elasticity of demand is important for CVS to consider in order to operate smoothly. Making changes to their business practices can significantly impact CVS's profitability.

Global economic conditions have changed in the past six months and policymakers have successfully addressed potential threats to global activities. The United States' Pharmaceutical Industry plays a major role in the country's economy and continues to experience rapid growth. Currently, the US economy is experiencing moderate expansion and indicators of economic growth are gaining momentum. Equity markets have performed well this year.

References:
Anonymous (2012). "What Are Barriers to Entry." Retrieved from website: www.wisegeek.com/what-are-barriers-to-entry.htm.
Retrieved from website: www.federalreserve.gov/monetarypolicy/beigebook/beigebook201304.htm?San Francisco.
Retrieved from

website: www.ehow.com/how_6713701_calculate-profit_maximizing-quantity.html.The website smallbusiness.chron.com/pricing-vs-nonpricing-strategies-14166.html contains information on pricing vs. non-pricing strategies. The book "Economics: Principles, jobs, and policies" (18th ed.) by McConnell.C.R., Brue.S.L., Flynn.S.M. (2009) is available in multiple pages on the same website [html]. Another book by McConnell.C. and Brue.S. (2004), titled "Economics: principles, jobs and policies," has also been published. Tom Vander Beken's book "The European Pharmaceutical Sector and Crime Vulnerabilities" explores the relationship between price elasticity and total revenue in the European Pharmaceutical Sector. This publication was released on January 1, 2007 [html].