Explanation, Analysis and Understanding of the Sub-topics, such as, Demand, Supply, Price Elasticity and Income Affects over Customers

Explanation, analysis and understanding of the sub-topics, such as, demand, supply, price elasticity and income affects over customers.

Demand is the willingness of a product which a person is able to buy at the given price. Demand is an important tool in the market. The law of demand states that, as the price of a product increases, demand for that particular product will decrease. Price and quantity demanded have an inverse relationship between them.

Price elasticity of demand is another concept showing a change in the responsiveness of a good or service due to a change in its price.

Price elasticity of demand can be calculated by this formula:-

%change in quantity demanded

%change in price

Supply is another tool used in the market. Supply is the willingness of a supplier, to supply his/her product at the given price. The law of supply states that, if there is an increase in the price, there will be an increase in the supply as well. In this case, price and quantity supplied have a direct relationship. Price elasticity of supply is the responsiveness or elasticity of the quantity supplied of a good or service to a change in its price

Demand and supply plays an important role in the economy. It helps in determining the price of a product with the forces of demand and supply. An equilibrium point is made, where quantity demanded is equal to quantity supplied, represented by the intersection of demand curve and supply curve, as shown below:-

A supermarket in Malaysia, commonly known as “Giant” is a very huge supplier. It has a vast variety of goods including, food items, clothing, electronics and so on. Their target audience is mainly of middle-class people, but they make sure to provide such commodi...

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...we have discussed the above mentioned points, we can conclude that, supermarkets like Giant have a greater risk of carrying large stocks, as it could turn into a threat for them, if there is a change in taste and fashion for their customers. They should use “Just-in-time method” as it can help and prevent threats.

Regarding grocery shop like, Cyberia Market, we can conclude that, they operate in a niche market. They can build their relationship stronger with their customers by being direct to them. Owner should try to be in a casual relationship with his/her daily customers so that they do not lose their customers. Even this can help owner or manager of Cyberia Market to understand their customers, they can predict if there is going to be a change in taste or fashion of their customer and can meet these needs or wants on time in order to maximize their profits.