Study of Price Policy versus Demand Elasticity in the German Ceramic Market

This report analyzes demand elasticity in relation to pricing policies in the Spanish ceramic sector, focusing on the German market for the year 2024. It is based on historical and projected data, considering seasonal factors and market trends.

2. Analysis of Demand Elasticity
The provided graphs show the monthly evolution of demand elasticity along with the average price throughout the year, as well as the relationship between the variation in exported square meters and the average price in Germany. The following key patterns are observed:

Months with high positive elasticity (March and July): Increases in the average price were accompanied by significant increases in exported volume. This indicates that the market responded favorably to higher value-added products.

Months with pronounced negative elasticity (April and September): Increases in the average price resulted in declines in exported volume, reflecting a lower market willingness to accept higher prices.

In November, the average price reached its annual peak (€14.31/m2), but with elasticity close to zero, suggesting that the market resisted absorbing higher prices.

In December, an attempt was made to stimulate demand by reducing the average price by -7.7%, but the estimated volume impact (+3.4%) was insufficient to meet projected revenue targets.

3. Projections and Monthly Demand Variation in 2024
The table analysis indicates a projected -10.43% decrease in total demand for 2024 compared to 2023. Some key highlights include:

January and February experience declines of -17.15% and -12.93%, respectively, coinciding with high average prices and lower elasticity.

April shows a recovery of 8.60%, possibly attributable to seasonal price adjustments.

November and March exhibit the sharpest declines, with variations of -22.48% and -24.02%, respectively.

December presents a projected demand between €6,525,000 and €10,897,000, with a central estimate of €9,860,000, reflecting uncertainty in the forecast.

4. Relationship with Pricing Policies
The average price fluctuates throughout the year, with an overall average of €13.18/m2. Key observations include:

In months with the highest demand decline (March, November), the average price is relatively high (€12.86/m2 and €14.31/m2), suggesting that price levels may be negatively affecting demand.

Negative elasticity in some periods indicates that price reductions could stimulate demand.

Months with greater price stability (July and August) show less fluctuation in demand.

The analysis of the relationship between exported square meters and average price indicates that pricing policy has not always aligned with elasticity patterns, impacting export volumes in certain months.

5. Seasonality Analysis

March (1.19): Coincides with negative elasticity (-15.46), indicating that the market is more price-sensitive during high-activity periods.

May-July (1.14-1.16): Shows positive elasticities (8.02 and 3.45), indicating a better market response to price adjustments.

Low seasonality periods:

August (0.89): Negative elasticity (-0.62), consistent with a lower activity period.

December (0.62): Negative elasticity (-3.09), coinciding with the lowest seasonal index of the year.

6. Conclusions and Recommendations
Based on the analysis, the following strategies are suggested:

Implement more flexible pricing policies, adjusting prices to monthly elasticity to mitigate demand declines.

Reduce prices in months with high negative elasticity to stimulate demand.

Leverage low elasticity in certain months to maximize revenue without significantly affecting sales volume.

Anticipate trends in elasticity and adapt pricing policies proactively.

Optimize pricing strategies based on seasonality indices and market elasticity variations.

Use a more analytical and data-driven approach to adjust prices according to the observed relationship between exported square meters and average price.

This work provides a foundation for informed decision-making in pricing management and market strategies for the Spanish ceramic sector in Germany that could be implemented in the forthcoming years.