DEMAND ANALYSIS

BySanjot Nikam Charuta Jagtap Sayali Saha Karnika Jalvi Vikas Bhoir

INTRODUCTION

Demand describes the consumers desire and willingness to pay a price to for a specific good or service. Demand = Desire + Willingness + Ability to pay

Demand can be either household or investment demand catering to individual or at organizational levels respectively.

BUSINESS FORECASTING

Business forecasting is a process used to estimate or predict future patterns using business data. In other words, forecasts are numerical estimates of an event for some future date that can be achieved with a specified level of support and are reproducible.

Methods o Qualitative/Quantitative o Nave approach o Reference class forecasting

MARKET STRUCTURE
Monopolistic competition Oligopoly Duopoly Monopsony Oligopsony Monopoly

Natural Monopoly Perfect competition

Market structure

FACTORS INFLUENCING DEMAND

Price of the product Distribution of income and wealth Taste, Habits, Scale of preferences Price of related Goods Standard of living & spending habits of people Future Expectations Fashions Weather conditions Advertisements Government policies

LAW OF DEMAND
The Law of demand states that the quantity demanded and the price of a commodity are inversely related, other things remaining constant.

ASSUMPTIONS OF LAW OF DEMAND:

Habits, tastes and fashions remain constant. Money, income of the consumer does not change. Prices of other goods remain constant. The commodity in question has no substitute or is not in competition by other goods. The commodity is a normal good and has no prestige or status value. People do not expect changes in the price. Price is independent and demand is dependent.

EXCEPTIONS TO THE LAW OF DEMAND

Giffen goods Commodities used as Status Symbols Expectation of rise and fall of price in future Ignorance on part of consumer about quality

DEMAND SCHEDULE

The demand schedule is defined as the willingness and ability of a consumer to purchase a given product in a given frame of time. A demand curve is a graphical depiction of the law of demand. The picturization or the plotting of the demand schedule is called the demand curve. It is the curve showing different quantities demanded at alternative prices.

DEMAND ELASTICITY

The demand elasticity refers to how sensitive the demand for a good is to changes in other economic variables.

Price Elasticity
o

Measures how much the quantity demanded of a good changes when its price changes.
PED = % Change in Qty Demanded % Change in Price

DEMAND CURVES OF DIFFERENT ELASTICITIES (LESS ELASTIC)

DEMAND CURVES OF DIFFERENT ELASTICITIES (MORE ELASTIC)

PERFECTLY (IN)ELASTIC

CONSTANT UNIT ELASTICITY

DEMAND ANALYSIS FOR VARIOUS PRODUCTS &

SITUATIONS

INDEPENDENT VARIABLES AFFECTING DEMAND OF CADBURY DAIRY MILK

Price Income Population & Age group Brand Image Consumers taste and preferences Competition Price of Complementary Goods Advertisement campaign Celebrations & Occasions

LONG RUN & SHORT RUN DEMAND

Short run demand refers to the demand with its immediate reaction to price change, income fluctuations. Main concern is to find out whether the rival firm will also react by reducing its price or not. Long run demand exists as a result of the changes in pricing, promotion or product improvement. More elastic than short run demand.

DURABLE & NON-DURABLE GOODS DEMAND

A durable good or a hard good is a good that does not quickly wear out or more specifically, one that yields utility over time rather than being completely consumed in one use. Goods such as refrigerators, cars, or mobile phones usually continue to be useful for three or more years of use. Nondurable goods or soft goods (consumables) goods that are immediately consumed in one use or ones that have a lifespan of less than 3 years. Goods include fast moving consumer goods such as cosmetics and cleaning products, food, fuel, beer, cigarettes, medication etc.

AUTONOMOUS DEMAND & FIRM DEMAND

When a particular commodity is demanded for its own sake it is known as autonomous demand. Demand for house is an example for autonomous demand. When the demand for a product is tied to the purchase of some parent product, its demand is called induced or derived. An industry is the aggregate of firms (companies). Thus the Companys demand is similar to an individual demand, whereas the industrys demand is similar to aggregated total demand.

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