Definition, Determinants and Nature or Types of Demand

1. Demand Analysis : Definition and Determinants of Demand

2. Introduction to Demand Analysis Demand is the basis for the starting of any business, as the product decision and amount of product to be produced would be decided only on the basis of the demand prevailing in the market i.e. depending on the market survey and demand forecast. Demand only decides indirectly the amount of factors of production to be employed in the organization i.e. money, men, material, machinery and management required. Without proper demand analysis, if production activity is undertaken the business firm may suffer huge losses.

3. Definition of Demand According to Benham : “The demand for anything, at a given price, is the amount of it, which will be bought per unit of time, at that price.” According to Bobber, “By demand we mean the various quantities of a given commodity or service which consumers would buy in one market in a given period of time at various prices.” Requisites: Desire for specific commodity. Sufficient resources to purchase the desired commodity. Willingness to spend the resources. Availability of the commodity at ( i ) Certain price (ii) Certain place (iii) Certain time.

4. Nature & Types of Demand Consumer Goods Vs Producer Goods Autonomous Demand Vs Derived Demand Durable Goods Vs. Perishable Goods Firm Demand Vs Industry Demand Short term Demand Vs Long term Demand New Demand Vs Replacement Demand Total Market Vs Segment Market Demand

5. Bases & Examples for Types of Demand S.NO TYPES & NATURE OF DEMAND BASES EXAMPLES 1 Consumer Goods Vs Producer Goods User: Individual or Firm Automobiles – Steel, Rubber 2 Autonomous Demand Vs Derived Demand Dependability: Direct or Indirect Bike – Petrol Computer-Internet 3 Durable Goods Vs. Perishable Goods Life of Good : Long or Short Home Appliance – Bakery, Vegetables 4 Firm Demand Vs Industry Demand Totality: Single or Aggregate Airtel Demand – Telecom Industry 5 Short term Demand Vs Long term Demand Duration : Short or Long Below one Year- Above one Year 6 New Demand Vs Replacement Demand New ness : New or Derived Rexona to Hamam Bank Account 7 Total Market Demand Vs Segment Market Demand Area of Demand : Part or Full Whole Market – One State

6. Determinants of Demand Price of the Product Income of the Consumers Tastes, Habits and Preference of the Consumer Relative price of Substitute Goods Relative Price of Complement Goods Consumer Expectation Population Climate and Weather Advertisement effect

7. Determinants of Demand Demand Function : The demand function for a commodity describes the relationship between quantities of the commodity which consumers demand during a specific period and the factors which influence its demand. Mathematically, demand function can be expressed as follows  

8. Definition and Determinants of Demand Thank You & Any Doubts