Demand
Demand is the consumer desire and
ability to purchase a product or service. Without demand no business can
operate in the market. Demand is backed by ‘Law of Demand’ which states that if
the price of a good increase, the quantity demanded decreases & vice-versa.
Example: - When I was pursuing my Graduation, I used to go
the college via motorbike, so when there is hike in the price of petrol, then I
only go to the college and not anywhere else whereas earlier I used to go to
different places also, after college timings. So which means that when the
price of petrol increases, I consume less of it due to which its demand
decreases.
People Respond to
Incentives
Here we can see that if we offer
more in less price, the people responsiveness towards the product or service
increases. In other words, if someone offers more by taking less, people tend
towards that product or service because it offers more in less price.
Example: - Suppose I have gone to purchase a shirt in a
shopping mall, there I can see that the price of the shirt is Rs.2000/- but it
that shirt there is a tag which tells about Buy 1 Get 1 Free, so which
attracted me towards it and at the price of a shirt I purchased two shirts. So
it will provide me more by taking less.
Number and Price
of Substitutes
As we can see that as the number
of substitute product increases the price of the product decreases.
Example: - There is a mobile brand offers for around Rs.
30000/- plus smartphones & then there is another brand which offers for the
same features at Rs.20000/-, so people shift from 1st brand to 2nd
brand due to its price and availability of all features. Now, the 1st
brand has to reduce its cost and offer the product for around Rs.20000/-, so
that to match the competency. So here we can see that according to the
substitute product the price of product decreases.
Supply
Producers willingness and ability
to offers products at various prices in the market. In other words, supply is
the total quantity of products or services available to the customers.
Example: - There is a company called HUL, which product we are
using from long before, due to its supply or availability in the market, it is
available in our nearby stores and it is known everywhere.
Utility
Utility is the measure of
satisfaction which refers to the level of satisfaction which one received after
consumption of a product.
Example: - I purchased a shirt which is comfortable for me,
so in which I can say that I obtain full satisfaction from that product.
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