Example Of Essay On “Why Is Turkey Cheaper When Demand Is Higher?”

Introduction

It is common knowledge that most products increase with the rise in demand. However, the increase in the competition within the industries forces some business enterprises to adopt an aggressive pricing strategy of selling their products at the low prices when the demand is high. Such ventures do so to attract more customers who make up for the losses on the low-priced products with extra purchases of profitable products. The strategy is referred to as loss-leader pricing strategy. The article titled, “Why Is Turkey Cheaper When Demand Is Higher?” by Catherine Rampell delves into the strategy mentioned above.
Catherine explains why the sellers of turkeys sell them at low prices during Novembers each year when the demand is extremely high. According to the government data, cited by her in the article, there is a substantial fall in price of frozen whole turkey in the Novembers. The author argues that the price of a freshly killed turkey is higher than that of a rock-solid frozen turkey. She claims that this trend disobeys the supply-and-demand curves taught in the introductory micro where the prices increase with the outward shift of the demand curve.
She gives some examples of products whose prices increase with the rise in demand. These include the Major League Baseball tickets and airline tickets. She also provides examples of products whose prices fall with the rise in demand, and such products include the television sets, avocados, and tuna. She states that fresh turkeys are maybe like roses while frozen turkeys are maybe like TVs. According to her, the TVs and frozen turkeys’ sellers sell at low prices when the demand is high to attract the customers to their stores in the anticipation that they will buy the other products in bulk. As a result, the sellers make up for the losses in TVs and frozen turkeys with the additional purchases of the profitable goods within their stores. She calls this the supply-side explanation.
However, she says that not all highly seasoned products get cheaper in peak demand, and examples of such products are roses. One of the probable reasons why the market forces are not the same for frozen turkeys and roses during their respective holidays as Catherine points out in the article is the loss-leader strategy. The approach only works if a seller is a multiproduct retailer hence the florists cannot employ it because they only sell flowers. In addition, roses are supply inelastic and just like the fresh turkeys they are costly. The two products are purchased by the higher-income earners disproportionately. The frozen turkeys are cheap because, unlike the freshly killed birds, they are slaughtered in advance and stored for peak demand. Conclusively, the author has increased my knowledge of why retailers sell some of their products at low prices during the peak periods.

Work cited

Rampell, Catherine. "Why Is Turkey Cheaper When Demand Is Higher?" The New York Times 19 Nov. 2013: n. pag. Web. 19 Feb. 2015. <http://www.nytimes.com/2013/11/24/magazine/why-is-turkey-cheaper-when-demand-is-higher.html?_r=0>.