Jaguar Cars

3025 Words Mar 18th, 2011 13 Pages
alysis of jaguar cars
Introduction: Jaguar Cars was founded by Sir William Lyons in 1922. The main mission of the organisation is to “build beautiful fast cars” (Jaguar, 2008). Jaguar Cars is a major car manufacturer and is based in West Midlands, UK. Jaguar is a brand which has gained a lot of fame in many countries. Recently, Jaguar cars were taken over by Indian major Tata. As per FAME, the organisation has been classified and is stated to engage in “Design, development, manufacture and marketing of high performance luxury saloons and specialist sports cars” (FAME, 2008). In 2007, the organisation registered a significant drop in turnover. From approximately £ 1.4m in 2006 it dropped to £ 1.1m in 2007. Last year the organisation went
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Other luxury cars available are Bentley etc.

Determinants of elasticity of demand: There are various factors that determine the elasticity of demand for Jaguar cars

Substitutes: The unique design for cars makes Jaguar cars unique and with almost negligible substitutes. There are no substitutes for Jaguar cars. Jaguar cars are expensive luxury cars and the next higher brand is considered as Bentley. There are other brands available such as Aston Martin but these cannot be classified as substitutes.

Percentage of Income: The percentage of a Jaguar Car’s price is a lot higher to the average income earned by consumers and hence the demand elasticity is higher. As the product is expensive and is of very high value, consumers do not choose to spend easily.

Necessity: Necessity of a product is an important determinant of elasticity of demand. With respect to Jaguar Cars, the product represents luxury than a necessity. As Jaguar Cars doesn’t represent necessity in general. And due to this the elasticity of demand is high.

Duration of price change: The price for Jaguar cars in terms of luxury cars remains the same for longer periods of time and a drop in prices is minimal and happens on rare occasions. One of the recent announcements regarding drop in VAT prices brought a change in prices. Due to this the elasticity of demand remains high for Jaguar cars.

Thus, by considering the determinants of elasticity of demand it can be noted that

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