demand

(noun)

The desire to purchase goods and services.

Related Terms

Examples of demand in the following topics:

  • The Demand Curve

    • This is referred to as the demand curve.
    • The demand curve for all consumers together follows from the demand curve of every individual consumer: the individual demands at each price are added together.
    • The constant "b" is the slope of the demand curve and shows how the price of the good affects the quantity demanded.
    • The graph of the demand curve uses the inverse demand function in which price is expressed as a function of quantity.
    • The shift of a demand curve takes place when there is a change in any non-price determinant of demand, resulting in a new demand curve.

  • The Influence of Supply and Demand on Price

    • If there is a strong demand for gas, but there is less gasoline, then the price goes up.
    • If there is a strong demand for gas, but there is less gasoline, then the price goes up.
    • Supply and demand is an economic model of price determination in a market.
    • Since determinants of supply and demand other than the price of the good in question are not explicitly represented in the supply-demand diagram, changes in the values of these variables are represented by moving the supply and demand curves (often described as "shifts" in the curves).
    • Apply the basic laws of supply and demand to different economic  scenarios

  • Elasticity of Demand

    • Elasticity of demand is a measure used in economics to show the responsiveness of the quantity demanded of an item to a change in its price.
    • Price elasticity of demand (PED or Ed) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price.
    • More precisely, it gives the percentage change in quantity demanded in response to a one percent change in price (holding constant all the other determinants of demand, such as income).
    • A number of factors can thus affect the elasticity of demand for a good:
    • Identify the key factors that determine the elasticity of demand for a good

  • Stimulating Demand

    • For brands to successfully stimulate consumer demand, they must understand consumer needs and motives.
    • Companies are now increasingly focusing on how to stimulate consumer demand and compete for customer loyalty.
    • For there to be a demand for products and services, there must be consumer need and motivation.
    • To stimulate demand, brands must first understand the needs and motives of consumers.
    • Discuss the psychological factors that drive consumer demand, and how they play into marketing segmentation

  • Market Share

    • Market share is key metric that helps firms evaluate demand in their market and can be influenced by PR and marketing campaigns.
    • This metric, supplemented by changes in sales revenue, helps managers evaluate both primary and selective demand in their market.
    • Selective demand refers to demand for a specific brand while primary demand refers to demand for a product category.
    • Generally, sales growth resulting from primary demand (total market growth) is less costly and more profitable than that achieved by capturing share from competitors.
    • The price reduction is intended to increase demand from customers who are judged to be sensitive to changes in price.

  • Perishability

    • Perishability can affect company performance as balancing supply and demand is very difficult.
    • Demand can be difficult to forecast.
    • Demand can vary by season, time of day, or business cycle.
    • As demand fluctuates, it can be very difficult to maintain quality service.
    • For example, to offset high demand during the tourist season, a hotel in Hawaii may hire more employees.

  • Demand-Based Pricing

    • Demand-based pricing is any pricing method that uses consumer demand - based on perceived value - as the central element.
    • Demand-based pricing, also known as customer-based pricing, is any pricing method that uses consumer demand - based on perceived value - as the central element.
    • The theory is this drives demand greater than would be expected if consumers were perfectly rational.
    • Price skimming is sometimes referred to as riding down the demand curve.
    • Demonstrate the meaning of and the different types of demand-based pricing

  • Streamlining Distribution

    • Demand forecast and planning with empirical knowledge (forecasts based on the demand within the previous period) use statistical data and mathematical functions.
    • It may be said that demand forecast is a one-sided process, since forecasts are used as the basis for planning only the possible customers' demand, rather than the quantity of goods that can be produced over the future period.
    • Stock planning allows the optimal level and location of finished products that meet the demand and the level of service of the end users.
    • Supply chain planning compares the demand forecast with the actual demand in order to develop a "master plan" (schedule), based on the multi-level sources and critical materials.
    • The master plan is based on the availability of materials, factory capacity, demand, and other operation factors.

  • Yield Management Systems

    • The models attempt to forecast the total demand for all products or services they provide, by market segment and price point.
    • Since total demand normally exceeds what the particular firm can produce in that period, the models attempt to optimize the firm's output to maximize revenue.
    • With an advance forecast of demand and pricing flexibility, buyers will self-sort based on their price sensitivity (using more power in off-peak hours or going to the theater mid-week), their demand sensitivity (must have the higher cost early morning flight or must go to the Saturday night opera) or their time of purchase (usually paying a premium for booking late).
    • Good yield management maximizes (or at least significantly increases) revenue production for the same number of units, by taking advantage of the forecast of high demand and low demand periods.
    • This effectively shifts demand from high demand periods to low demand periods by charging a premium for late bookings.

  • Marginal Analysis

    • If, for example, an item has a marginal cost of $1.00 and a normal selling price of $2.00 the firm selling the item might wish to lower the price to $1.10 if demand has waned.
    • If the industry is perfectly competitive (as is assumed in the diagram), the firm faces a demand curve (D) that is identical to its marginal revenue curve (MR).
    • Thus, this is a horizontal line at a price determined by industry supply and demand.
    • For example, the marginal revenue curve would have a negative gradient, due to the overall market demand curve.
    • In some cases, a firm's demand and cost conditions are such that marginal profits are greater than zero for all levels of production up to a certain maximum.