1. www.velsuniv.org Subject: Management Principles & Organizational behaviorSubject: Management Principles & Organizational behavior

2. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org Demand means a desire or wish to buy and consume a commodity or service.Demand means a desire or wish to buy and consume a commodity or service. But in economics a mere desire or wish does not constitute demandBut in economics a mere desire or wish does not constitute demand Introduction- Demand

3. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org The growth rate of over 25 percent in IT/ITES sector of India is leading to a tremendous demand of qualified IT professionalThe growth rate of over 25 percent in IT/ITES sector of India is leading to a tremendous demand of qualified IT professional The demand supply gap of wheat in 2007 was 40 lakh tonnesThe demand supply gap of wheat in 2007 was 40 lakh tonnes The India hydrocarbon Vision 2025 Report estimates that the demand for natural gas is expected to show a sharp rise in future.The India hydrocarbon Vision 2025 Report estimates that the demand for natural gas is expected to show a sharp rise in future. Introduction- Demand

4. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org Demand is defined as that want, need or desire which is backed by willingness and ability to buy a particular, commodity, in a given period of timeDemand is defined as that want, need or desire which is backed by willingness and ability to buy a particular, commodity, in a given period of time Demand is effective desire, as it is backed by willingness to pay and ability to pay.Demand is effective desire, as it is backed by willingness to pay and ability to pay. Demand

5. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org D= f ( t, y, P, N, F, D, C, B) D= f ( t, y, P, N, F, D, C, B) D= Quantity of demand D= Quantity of demand T= tastes and preference of the consumer T= tastes and preference of the consumer P= price of substitute P= price of substitute N= Number of consumers N= Number of consumers F= Expectation of future price rise F= Expectation of future price rise D= Distribution of income D= Distribution of income C= Climate and weather C= Climate and weather B= State of business B= State of business Demand Function

6. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org Determinants of Demand Determinants of Demand  Price of demand(-)  Income of the consumer(+) ( Normal Goods & Inferior Goods)  Price of related goods or substitute ( Substitutes & complements) Substitutes are goods that satisfy a similar need and can be used as replacement of each other. Complements are demanded jointly. Substitutes are goods that satisfy a similar need and can be used as replacement of each other. Complements are demanded jointly.  Tastes and preferences  Advertising

7. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org A survey of rural consumers has shown an amazing finding that for most of the product categories surveyed, the consumers were not influenced by advertisements or promotionsA survey of rural consumers has shown an amazing finding that for most of the product categories surveyed, the consumers were not influenced by advertisements or promotions 73% of respondent feel that promotion has not or moderate effect on buying various products, which included detergent powder, bathing soap, shampoo, hair oil, watches, tea, edible and bicycle.73% of respondent feel that promotion has not or moderate effect on buying various products, which included detergent powder, bathing soap, shampoo, hair oil, watches, tea, edible and bicycle. 54% and 75%mof rural consumer give importance for soft drink and edible oil54% and 75%mof rural consumer give importance for soft drink and edible oil Advertising facts:

8. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org Advertisement is a wasteful expenditure. Do you agree?

9. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org  Consumer’s expectation of future income and price  Population  Climate and Weather  Growth of Economy Determinants of demand

10. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org o Direct and derived demand Consumer goods: It is the commodity demanded for its own sake by the final consumer is called direct demand Capital goods: It is the commodity demanded for using as a raw material or intermediary purpose then it is called as derived demand Ex: New building, mobile accessories Types of Demand

11. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org o Recurring and Replacement demand: Consumable demand have recurring demand; durable consumer goods are purchased to be used for a long time but they need replacement Types of Demand

12. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org o Complementary and competing demand: Complementary demand: When one commodity is demanded to satisfy a single want, such demand is called as joint or complementary demand. Competing demand: Goods that compete with each other to satisfy any particular want are called substitute Types of Demand

13. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org o Individual and market demand: o Demand for an individual consumer is individual demand. o Industry demand is the demand for the product produced by all the firms in the industry. Types of Demand

14. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org Law of Demand “The Law of demand states that people will buy more at lower prices and buy less at higher prices” Paul samuelson Paul samuelson

15. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org Law of demand can be understood with the following  Price effect  Substitution effect  Income effect  Law of diminishing marginal utility Law of Demand

16. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org Law of demand Price effect: It explains why a fall in price results in rise in demand and vice versa. Example: Multiple use product like milk, electricity, coal or steel

17. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org Law of demand Substitution effect: When price of a commodity falls, it becomes more easily affordable and thus more attractive to the consumer Income effect: Fall or rise in income has the effect on demand Law of diminishing marginal utility: As per Law of Diminishing Marginal utility, the utility derived from every next unit of a commodity consumer goes on falling.

18. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org The Law of Demand P Q A B P Q D1D1 D2D2 CHANGE IN PRICE= change in quantity demanded CHANGE IN OTHER= change in demand P1P1 P2P2 Q1Q1 Q2Q2

19. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org The Law of Demand P Q D1D1 D2D2 CHANGE IN OTHER= change in demand

20. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org Demand Schedule and Demand Curve Demand Schedule: It is the list or tabular statement of the different combinations of price and quantity demanded of a commodity. Demand Curve: The demand curve shows the relationship between price of a good and the quantity demanded by consumers.

21. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org Exceptions to the Law of demand  Giffen Paradox: ( Inferior goods) Sir Robert Giffen, an economist, was the first to give an explanation to this situation. Sir Robert Giffen, an economist, was the first to give an explanation to this situation. Ireland scenario Ireland scenario  Snob Appeal: (Veblen effect) In which consumer measures the satisfaction derived from their utility value, but by social status. In which consumer measures the satisfaction derived from their utility value, but by social status.

22. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org Exception of Law of Demand  Demonstration effect: Demonstration effect is the influence on a person’s behaviour Demonstration effect is the influence on a person’s behaviour  Future expectation of prices: (Panic buying) People purchase goods with the expectation that prices will rise more in the future. People purchase goods with the expectation that prices will rise more in the future.  Goods with No substitutes:  Insignificant use of the product

23. Executive Placement 2003 BIM School of Management Studies – Striving towards Excellence Vels University www.velsuniv.org That is all about Demand………………………… Thank you Thank you