Download - What is Market Research?
What is Market
Research?
http://www.google.com/insig
hts/consumersurveys/home#
A neutral source on information
Allows for change in the economy
It allows freedom of choice
What is the role of PRICE in the economy?
DEMAND
DemandDemand is the desire to have some
good or service and the ability to pay for it.
The law of demand states that when the PRICE of a good or service GOES DOWN, consumers buy MORE, meaning demand increases.
If price goes UP, demand should DECREASE.
The Big Bang Theory 5x05 - The Sword - YouTube
Demand Curve
Pt.Price
of DVDs
Quantity Demande
d
A $30 0
B $25 1
C $20 2
D $15 3
E $10 4
F $5 50
Quantity
Price
1 2 4 53
5
15
20
10
25
30
A
B
C
D
E
F
DEM
AND CU
RVE
https://www.youtube.com/watch?v=Z1Auh-G--vQ
Demand ChangesChange in quantity demanded is a
change in PRICE or QUANTIY. This will cause you to move along the curve, up/down. We call these “MOVERS”
Quantity
Price
A
B
C
D
E
F
Change in Quantity Demand
Moves along the curve
Demand ChangesChange in demand meanwhile is a
change in the AMOUNT YOU BUY. This means the curve will shift to the left or to the right. We call these “SHIFTERS”
Quantity
Price
A
B
C
D
E
F
Change in Demand
B
C
D
E
F
A
Shifts left or right
There are six factors that
influence Demand.
SubstitutesSubstitutes are goods/services
that can be used in place of another good or service.
If the price of a substitute changes, people may be more/less inclined to get the original item.
Example Pepsi or Coca Cola
P
Q
P
Q
Substitute’s price goes up
Substitute’s price goes down
ComplementsComplements are goods that
are used together, so that a rise in demand in one good will increase the demand for the other good.
Example:
hammer & nails
P
Q
P
Q
Complement’s price goes up
Complement’s price goes down
IncomePeople’s ability to buy certain
goods is affected by their income.
If their income changes, then their ability to buy certain goods will change.
P
Q
P
Q
Recession hits: Lower Incomes
Economic Growth: Higher Incomes
Consumer TastesPeople’s tastes are constantly
changing!
Advertising influences people’s tastes.
http://www.youtube.com/watch?v=R55e-uHQna0
TermsNormal Goods – goods consumers
demand more of when their income rises.
Inferior Goods – goods that consumers demand more of when their income falls.
P
Q
P
Q
Recession hits: Generic brand goods
Economic Growth: Generic brand goods
Consumer Expectations If you expect a good to go
on sale next month, you will WAIT to buy that product
Examples Cars
Gas
Tickle-Me-Elmo
P
Q
P
Q
Consumers expect price to rise
Consumers expect price to fall
Market SizeThe size of the market is based
on the number of consumers.
If people leave a region, the market size will decrease meaning the curve will shift to the left and vice versa.
Example People leaving Buffalo has caused a smaller
market size.
More people moving to Florida and Texas has created larger market sizes in these states.
P
Q
P
Q
Bigger Population Smaller Population
Elasticity of DemandElasticity of demand is how responsive
consumers are to price changes.
Elastic demand – quantity demanded will change greatly as price changes.
Elastic Demand
0Quantity
Price
1 2 4 53
5
15
20
10
25
30
A
BC
DE
F
DEMAND CURVE
When demand is elastic, prices will not change much, but quantity demanded will change.
Elasticity of Demand Inelastic demand – quantity demanded
will change little as price changes.
Inelastic Demand
0Quantity
Price
10
20
40
50
30
5
15
20
10
25
30
A
B
C
D
E
F
DEM
AN
D C
UR
VE
When demand is in elastic, prices will change a lot, but quantity demanded will not change much.
Fact
ors
that
Dete
rmin
e E
last
icit
yAre there good substitutes?
Yes = elastic No = inelastic
What proportion of income does it use?Large = elastic Small = inelastic
Is it a necessity or a luxury?Luxury = elastic Necessity = inelastic