DEMAND ANALYSIS Demand is one of the most important aspects of managerial decision making. Its essential for – Creation Survival Profitability of the firm.

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Presentation transcript:

DEMAND ANALYSIS Demand is one of the most important aspects of managerial decision making. Its essential for – Creation Survival Profitability of the firm.

DEMAND It means the DAW factor A complete statement of demand must state-  Market dimension-whose demand  Price dimension-at what price  Time dimension-for how long

DEMAND TYPES INDIVIDUAL Individual’s demand for Footwear, clothes,food etc Individual households demand For-furniture,refigerator, fan. Individual firm’s demand for Steel,power,transport etc MARKET Summation of Individual demands.

DETERMINANTS OF DEMAND  General factors- P,Y,T,Pr.  Luxurious/Durable products- Fe(P,Y)  Market demand- N,A,S,C.  Nature of the product.

Mathematical relation VariabledirectionSign/ slope of parameter Price (Px)Inverse/ direct+ /- delta Q/ delta Px Income (Y)Direct / Inverse+/- delta Q/ delta Y Price of related products (Pr) Direct/ inverse+/- delta Q/ delta Pr Future expectations (F) Direct+ delta Q/ delta Fe Other factors

EXPRESSION OF DEMAND 3 ways- functional,mathematical,graphical. Demand function/equation Demand schedule. Demand graph/curve

LAW OF DEMAND Other things remaining the same, quantity demanded of a product/service varies inversely to its price. Reason- Income effect & Substitution effect.

MARKET RESEARCH & LAW OF DEMAND Market researcher’s have developed a viable Theory of consumer behaviour relevant to sales Executives with following results- 1.The more confidence a person has in price information as a indicator of quality the more he will choose highly priced products. 2.Social significance is attached with high priced products.

MARKET RESEARCH & LAW OF DEMAND 1. Experienced people purchase low priced products as compared to inexperienced who select high priced. 4. Often companies have realized that high price becomes essential for making consumers notice the real merits of the product. Hence its clear that consumer behaviour is not so simple in reality & they do not always behave as per Law of demand.

MOVEMENT vs SHIFT OF DEMAND GRAPH If we consider the price of commodity alone- its either expansion/contraction of demand. If we consider any other factor except price-its either increase/decrease in demand.

TYPES OF DEMAND Direct & Derived Demand. Joint & Cross Demand (compl,subst) Composite Demand. Industry & Firm Demand. Market & Segment Demand