What do you mean by the term ‘demand’?
Demand is more of an economics term, it refers to the utility for a good or a service with an economic agent which is related to the income of that entity. There is a difference between ‘demand’ and ‘quantity demand’ which is that, demand means graphing or listing of the quantity demand at each interval pieces of possible prices. Quantity demand on the other hand is the exact quantity which is demanded at a certain price. Change in the actual price will result in change in quantity demand but the ‘demand’ will remain the same. Demand lists the quantities to be brought at various prices.
On the other contrary, demand is just the willingness of the buyer and his or her ability to pay a rice which is significant for the product and to buy a quantity of a good or service. The quantity demanded reflects the amount of a product, which is the buyer is willing to pay without any hesitation. Demand is also known as the relationship between the price and the quantity demanded. Buyers have their own preferences and choices, the demand clarifies those choices and preferences of the consumers. The utility preferences are listed as per different factors such as the cost, odds and benefits of that product.
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What are the determinants of demand?
There are many factors and circumstances which determines or are the factors affecting the demand. These factors checks the willingness of the buyer to buy the product, some of them are:
1. Price of related goods
By mentioning related goods, there are basically two types of related goods, complements and substitutes. A substitute is a good which are used mainly in place of the primary good. The price of the substitute and the demand for that particular good remains positive. The relationship between the substitute good and the primary good is: If the price of the substitute goes down the demand for the good in question goes down. On the other hand, there is compliment good which is a good which is used with the primary good. Like when a buyer buys a television, he or she gets the remote as a compliment good. The relationship between the compliment good and the primary good is: If the price of the complement goes up the quantity demanded of the other good goes down.
2. Own price of the good
The demand is the basic relation between the price of the commodity and the quantities which is purchased at those prices. There is a negative relation or an inverse relation between the price and the demand of a product. This means when the price of the product rises, the quantity demanded by the buyer decreases and hen the price of the commodity decreases, the demand for the commodity by the buyer increases. The inverse relation is denoted by the downward slope of the consumer demand curve. The relation is stated as intuitive and is reasonable.
3. Personal Income
Personal income is the income of the buyer which he or she is willing to spend on a commodity. In most of the cases, the income which is disposable by the buyer if have more, he wishes to spend more. For ex: person number one has 4$ and person number two have 2$. There is a commodity which has a price of 2$. So, as sure the person with the high disposable income will buy more of that commodity in comparison with the other person.
4. Preferences and Tastes
Tastes and preferences play a crucial role in deciding the demand graph f a commodity. The greater a person has a desire to own a particular product, the more likely that he would buy the product, irrespective of its price. Although there is a minor distinction between a desire and a demand. Demand is basically a willingness and a going ability of person to put his or her desire into effect. On the other hand, desire is the measure of the willingness by a person for buying a good which is based on its intrinsic qualities and price.
5. Expectations by consumer about future prices, availability and income
This factor is very important which determines the demand for a product. It stats that if a consumer has a belief that the price of a commodity will rise in future then he or she may likely to buy that commodity or service right now. On the other side, if the consumer expects his or her income will be raised or higher in the future, the consumer will buy the commodity now. Another factor which affects the demand is the availability or the supply side which is predicted or has n expected availability in due time.
6. Population and nature of good
Demand is always directly proportional with the population. If the population of a region rises, the demand will automatically rise. Another factor of demand is the nature of the good. If the good selling is a basic commodity, its demand will be high always. For ex: Rice, water, pulses, etc. are basic commodities and will have high demand always.
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What are the different types of goods demand?
The different types of goods demand are:
Negative demand is a result when the market response of a product or to a product is very negative which means that the consumers are not fully aware about the product and its features. It also shows the lack of marketing and publicity of the commodity.
No demand simply means that there is no demand for product in the market. This happens when the product doesn’t aware people with sufficient information about the product. The consumer’s indifference also leads to this. The sole responsibility of this type of situation is of the marketing team of the company. They have to come up with good techniques and marketing strategies to cover up these lapses.
As the name suggests, seasonal demand are concerned with all the demands which come when a specific season comes and are not available for all year round. In different parts of world, seasons different from region to region. Seasonal demands sometimes becomes chaotic and may create huge problems for the firm which will result in idling of the capacity, excess expenditure on the promotions and marketing and the fixed costs.
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