demand Flashcards
Define demand.
The amount of a good that customers are willing and able to buy at a given price.
How does price determine levels of demand?
As a price goes up on a product or service, demand will normally go down as people are less willing or able to pay the price.
How does the price of substitutes determine levels of demand?
A substitute product is an alternative. If a customer is unable to afford a product they might use a substitute eg. public transport instead of a car.
How do alternative brands determine levels of demand?
If customers are able to buy a similar product with a similar brand profile they may go for the alternative instead.
How does the price of compliments determine levels of demand?
A complementary product is one that needs to be used with another product. If the price of complimentary goods rises then the demand for the main product falls.
How do changed in consumer income determine levels of demand?
As consumer incomes rise, demand for some products falls eg microwave meals.
As consumer incomes rise they have more disposable income to spend on luxuries like holidays.
How do trends and fads in fashion and tastes determine levels of demand?
As trends in goods and services rise, so does demand for these products.
Trends tend to be a change in consumer preference over time while fads are short lived.
How do population structure and demographics determine levels of demand?
The population is getting older, which means that different products and services will be in higher demand.
Weddings are going out of fashion so demand for wedding cakes might fall.
Uk is experiencing a baby boom= rise in demand for baby care products
How do advertising and branding determine levels of demand?
As products are heavily advertised they may experience an increase in demand. If this did not occur then a business would not invest in advertising at all.
Products in ads are sometimes associated with other things we already have a positive feeling about.
Heavy branding helps keep demand stable
How does the time of year determine levels of demand?
Some products reach peak demand at certain times of the year in the UK.
eg christmas trees, easter eggs
How does weather and climate determine levels of demand?
Some products have a seasonality factor and may be affected by the weather and the climate. eg icecream
How do external shocks determine levels of demand?
External shocks such as terrorism, war, disease and health scares can change demand.
Eg overseas terrorism reduces demand for holidays.
List the factors that determine levels of demand.
External shocks weather and climate Time of year Advertising and branding Population structure and demographics Trends and fads Changes in income Price price of substitutes alternative brands price of complimentary items
