Chapter 2 The Consumer BMI 3 C Mr

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Chapter 2: The Consumer BMI 3 C Mr. Whiler Company LOGO

2. 1 Consumer Demand § Read “The Pet Hotel” page 36 -37 § discuss How did she tailor her business to meet customer needs? Why is word of mouth effective in this instance? How does her promotions spending relate to supply and demand? What important considerations were noted in her business plan?

2. 1 Consumer Demand § Consumer a person who uses a product § Customer someone who buys a product they may not be the same person § children are consumers but not customers § sometimes a gatekeeper makes decisions marketers need to understand who they are marketing to. . .

2. 1 Consumer Demand § Needs REMINDER!!! something you require to live food, protection, water, affiliation, etc. § Wants things beyond what is needed to survive gourmet meals, i. Pads, hockey sticks while you might want a fancy meal, a simpler meal will keep you alive

2. 1 Consumer Demand § consumer demand is important to understand example: it is useless to market luxuries to people without food values change quickly § technology changes the value of objects § new trends § social pressures § changes in life § cost

BASIC ECONOMICS

Markets § Doesn’t have to be a physical location § They exist only when consumers / producers come together to exchange goods / services for money § So a market could be a store where you buy jeans or e. Bay

Markets contd. 2 major types of markets 1) consumer market “B 2 C” § Made up of all the things we use for personal consumption 2)business to business market “B 2 B” - made up of all the companies which sell things to other businesses

Have you ever wondered what determines the prices of the things you buy?

It comes down to supply vs. demand

Demand § Represents the consumer side of the market § How much of particular good/service do consumers want § 3 things determine the level of demand § Desire , Ability to pay , Willingness to pay

Supply § Represents the manufacturer side of the market § How much of a particular good/service can the manufacturer provide/is willing to provide

The battle between supply and demand supply demand

Demand for tootsie pops in Rustonia Price Market demand A B 20 40 700 500 Price Point B A Demand Quantity

Demand for tootsie pops in Rustonia Point Market demand A B C 20 40 60 700 500 350 Price C Price B A Demand Quantity

Demand for tootsie pops in Rustonia Point D A B C D 20 40 60 80 Market demand 700 500 350 200 Price C Price B A Quantity Demand

So what do we notice about the Demand CURVE § As the price of a good decreases demand for the good will increase

Supply for tootsie pops in Rustonia Price Supply Point Quantity Supply A A Price 20 100

Supply for tootsie pops in Rustonia Price Supply B Point Quantity Supply A B A Price 20 40 100 200

Supply for tootsie pops in Rustonia Supply Price C B Point Quantity Supply A B C A Price 20 40 60 100 200 350

Supply for tootsie pops in Rustonia Supply D Price C B Point Quantity Supply A B C D A Price 20 40 60 80 100 200 350 530

So What do we notice about THE SUPPLY CURVE • As the price of a good increases supply of the good will increase

But how does all of this determine the price of goods?

It’s something called Equilibrium § The market is said to be in equilibrium when supply equals demand

Combining the supply and demand curve for tootsie pops in Rustonia Supply Price Market is in equilibrium Demand = Supply Demand Quantity

Scenarios What happens when demand exceeds supply? When the Nintendo Wii was introduced…demand was very high but supply was low Result? ? prices skyrocketed !!! people were able to charge hundreds of dollars more for the Wii than they had purchased it for

Scenarios What happens when supply exceeds demand? When PS 4 was introduced, demand for Play. Station 3 dwindled because people would rather buy the latest version; however supply was high. Result? the price of Play. Station 3 dropped dramatically as retails just wanted to get rid of the product.

Other Scenarios Consider … The price of Hallowe’en candy on October 25 vs. its price on Nov 1 The price of Christmas decorations on December 1 versus December 26 Why can’t I find a BBQ at Canadian Tire in October? Why can’t I find a snowblower in May?

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