[Spooky23]

It only works for things that are price inelastic. Usually luxury or more high end products. Good examples are Rolex, Apple, Sony in the old days.

Otherwise price is elastic and using price change to tweak sales when demand slacks or oversupply exists is smart business.

[robocat]

Elasticity occurs in a competitive market with variable prices - it is a property that is measured as demand and supply vary.

When a monopoly manufacturer sets the price of a good that has no equivalent, talking about elasticity makes no sense.

[Spooky23]

That's exactly the point. It has nothing to do with a monopoly - retail is all about cashflow. Walmart has 2.8% net margins, and do it with a maniacal focus on cost control and vendor management.

A manufacturer with a unique product can control pricing and manage demand. The business is the "vertical", they don't live or die with retail. Apple discounts through authorized third parties only. Rolex constrains supply, controls retail price & experience, and generates demand with the secondary market premium. People buy a watch for $15k because it's "worth" $20k. It's inferior as a tool compared to a watch that costs $50, and there's a whole spectrum of fancy watches that don't have the same cachet.

JC Penney doesn't have that. They're stuck with a warehouse full of low-margin pants and need cashflow, so they discount to get cash in, then jack the price up at different part of the demand cycle. Khakis that are $40 for back to school are $75 right now, and coupons are used to keep the cost conscious folks coming.