Copyright © Karen Morel
http://www.ExploringMarketingSuccess.comThe business environment is always volatile because
it is affected by the supply and demand of the
marketplace.
There are many factors that can contribute to the
demand in the market and this demand will likewise
also affect the supply. It is important to look into
each of these factors to be able to keep up with changes.
One of the most important determinants of demand is
the income of the customer. When the income of the
customer falls then his ability to purchase goods
and services is affected.
Another factor that influences the demand for a
product is the prices of related goods. For example,
if the price of an apple falls for one particular
season then you can expect the customers to buy more
apples during that time frame even if they are used
to buying bananas. In this regard, the banana industry
suffers since the customers buy the apples because
of the low price.
Still another determinant of demand is the shifting
taste of the market. Sometimes, there are trends in
the market that drive the demand of products up while
other times it will adversely affect the demand in the
market. The taste of individuals themselves can reflect
on the overall demand of the market. If some customers
prefer chocolate more than coffee then you can expect
the demand of chocolate to be a lot more significant
compared to coffee.
Your expectations in the future are also likely to
affect the demand for a particular good or service right
now. For example, if you are expecting to earn a lot of
money in the near future then you will most likely be more
inclined to spend today. On the other hand, if you expect
to encounter financial difficulties in the near future
then your demand for products and services will decline
as you are likely to want to save your money right now.
Even the number of buyers the market has will have an
overall effect on the demand because they will drive
up the production of these goods. The prices of these
goods will also be dependent on the demand which is
created by the number of buyers.
As you can see, there are many determinants of demand
and as a business owner; you should know each of these
determinants individually and thoroughly, especially if
you are in an industry that is highly dependent on
the demands of the market. Every business in the world
needs to follow the trends and where the demand in the
market is going in order to survive. The enumerated
determinants of demands are just some of the things that
will affect the demand, as there are still other factors
that may affect the demand more than you thought possible.
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