A business has to act and react to what happens inside and outside of the company. Businesses exist within an external environment. This external environment is concerned with consumption and production. Economics is one of the main factors which is related to costs and prices of goods. What consumers want and need income, interest rates, exchange rates and rate of inflation (Sloman &Boer, 2009). This report undertakes secondary research to identify facts and trends for our SBE named as ‘Digi-wave’.
Why consumption is important?
Demand is unlimited people’s wants. Potential consumers make up a market, which are people with both the desire and the ability to buy specific products. All markets ultimately are people. There are three factors which affect demand. (Ken, 2002)
* Price of goods
The price of a good is the most influential factor consumer’s take into consideration. If the prices of some goods go down, this means that there is more money in a budget to be spent on other goods. However, if prices of goods rise there is less to spend on other goods. It is by this reasoning that the prices of other unrelated goods will have an effect upon the demand for any product.
*Income
In general terms, when the public’s income rises this influences consumer’s demand. People, who have low incomes, often buy products which they consider to be inferior to other products, which they would prefer, but cannot afford.
*Taste
Taste is the most important influence of consumer’s demand. Tastes include the value from people’s ideas, quality of goods, fashion, morality and straightforward preferences. For example, many people will not buy products which are made in certain countries where human rights are abused (2002, Ken...
... middle of paper ...
...ith a poster and some advertisements in student accommodation.
Increase awareness of potential users in both customer segments who have never heard of SBE named as Digi-wave.
*Place strategy
Distribute products through Hikuwai Plaza at AUT.
Wholesalers, retailers and mass merchandisers, must reach organizations purchasing departments.
Reference list
Sloman, J., & Boer, P,. (2009). Economics: New Zealand, Prentice Hall New Zealand.
Ferguson, K. (2002). Essential economics:a guide for business students. London:Palgrave
Trading Economics. (2009). Retrieved from http://www.tradingeconomics.com/Economics/Unemployment-rate.aspx?Symbol=NZD
Trading Economics. (2009). Retrieved from http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=NZD
Let’s begin with the theory of Scarcity. The concept of demand is directly relatable to the scarcity of an item. Let’s look at Jackson Pollock’s work for example. If only 20 paintings were available created by Jackson Pollock, there would be a much greater demand than if you could purchase them easily at your local art gallery.
Economic events are largely governed by the interaction of supply and demand. The law of supply states that with ‘all else being equal’ (ceteris paribus), as market price of a good or service increases/decreases so will an increase/decrease in quantity supplied. In turn, the law of demand states as market price of a good or service increases/decreases ceteris paribus, the quantity demanded will increase/decrease accordingly. The Australian avocado industry is an indicative example of microeconomics - the study of individual consumer or business decision making and spending behaviour in relation to the allocation of a limited resource and the correlation of supply and demand in determining
We are all consumers, and we buy diverse products every day. But, do you know what the main factor is that influences us to choose a product? If someone selects a cloth, maybe he pays attention to its quality! Customers’ decisions can be changed depending on what the main factors they are looking at. Various influences can cause consumers to select different products.
"Supply is the amount of goods available at a given price at any time. Demand is how many consumers desire the goods that are in supply. " When there are many people in the market, no one person or firm has any real control over the market price or the total quantity sold. Consumers are all unique, but they do share some common attributes.
The Basic Economic Problem Resources are finite, desires are infinite, and thus we must make choices. The real value of what you buy is the sacrifice of what you don’t buy. Demand and Supply Key Terms The Supply Curve: gives the relationship between price and quantity supplied when shown on a graph.
Price changes affect demand for various foods. According to the economic theory, consumption of a certain product falls as the price of that item rises...
Elasticity from a demand perspective refers to the response of the demand for a good as it relates to the changes in the price. When the consumers are responsive to a price change of a good or service it means the demand is relatively elastic. Conversely, when consumers are less rseponsive to a price change a good or service this demand situation is described as inelastic. More specifically, our text defines price elasticity as “the relative amount by which the quantity demanded will change in response to change in the price of a particular good” (Miller p. 415). Consumer’s tend to be sensitive to large price changes of common goods and may choose to purchase other goods and services or refrain
Demand is the amount of particular economic between the quantity of good and service for consumers
Every company wants to understand why people decide to buy its products or others. Firstly, we have to understand why people buy certain kind of product. People buy products because they need them. A need is activated and felt when there is a sufficient discrepancy between a desired or preferred state of being and the actual state. (Engle£¬Blackwell and Miniard. 1995. p407 ) For example, when you feel hungry, what you needs is some food. It is very important for marketer to understand the needs of consumers. All the consumers may have the same needs, but the ways which they satisfy what they need are different. Here is a example, Chinese people would choose rice when they feel hungry, whilst British people may choose bread to satisfy their needs.
Price Elasticity is the measure in responsiveness of consumers to changes in the price of a product or service. The evaluation and consideration of this measure is a useful tool in firms making decisions about pricing and production, and in governments making decisions about revenue and regulation. “Price Elasticity is impacted by measurable factors that allow managers to understand demand and pricing for their product or service; including the availability of substitutes, the consumer budgets for the product or service, and the time period for demand adjustments.” The proper consideration of Price Elasticity allows managers to set pricing such that the effect on Total Revenue is predictable and adjustments to production are timely. The concept of Price Elasticity is employed in the management of commercial firms and government.
... Also important is the price of complements, or goods that are used together. When the price of gasoline rises, the demand for cars falls.
If an individual’s income were to increase however, the demand for the cheap cars will decrease while the demand for costly cars will increase. Therefore, cheap cars are considered inferior goods, while luxury cars are considered normal goods when income is low, individuals tend to opt for public transport.
That is, it is sensitive to price change, and also to the quantity demanded. This means that if many people are consuming a good, the demand is greater than if less people are consuming the good. To further clarify, take the example of attending college. In an environment where most of an individual's peers are going to attend college, the individual will see college as the right thing to do, and also attend college to be like his peers. However, in an environment where most of an individual's peers are not going to attend college, the individual will have a decreased demand for college, and is unlikely to attend.
Consumer’s preference will eventually be transformed into demand. In principle, price is one major factor in influencing demand. The law of demand states that: all other factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease, and vice versa. There are five determinants of demand:
Price of the Product - This factor is so important to be considered in the projection of demand because as the law of demand states: “As the price of the product increases, the demand for the product will decrease and vice versa.” Generally, people are price-conscious; they want services with low prices but with high quality or those that will surely satisfy their needs. For instance, if the prices of services increase, there