Tip 1: How to determine the volume of demand

Finance

Tip 1: How to determine the volume of demand

The market is a mechanism of formationprices for goods, the volume of production and their subsequent sale. The driving elements of the market mechanism are supply, demand, competition and price. When planning the initial level of prices, it is necessary to determine the volume Demand based on market analysis and sales volumes.

Instructions

When determining the volume Demand It is necessary to establish the quantity of goods thatconsumers will buy for a certain period of time. At the same time, keep in mind that the decline in prices significantly increases the number of buyers and demand. With an increase in the price of goods volume Demand will decrease. That is, there is a definite relationship between the price for the goods and the quantity of the goods sold.

Scope Demand is equal to the product of the price of the functional indicator of the price by an amount Demand.

The volume Demand It affects not only the price set for the unitgoods, but also many other factors. Reducing or increasing the incomes of consumers accordingly requires fixing or lowering the price. With the growth of incomes, consumers acquire goods of better quality.

Remember that the emergence of complementary or substitute products in the market can also lead to a decrease in volumes Demand. Since there are many similar products on the market, and the prices for them also do not differ much from each other, the market is saturated with one category of goods.

The influence is also affected by changes in preferences andtastes of customers, their price expectations, as well as advertising costs. For example, the increase in anti-alcohol propaganda or the struggle of society with smoking causes a decrease in volumes Demand on such categories of goods. However, changes in habits in society are relatively slow, and regardless of the causes that caused changes in tastes, volumes Demand too hesitate.

If there is a shortage of goods on the market and expectations of a future price increase, there is an increase in volume Demand in a certain period. Consequently, the expectation of the forthcoming sale of goods or the appearance of a large number of similar goods leads to a temporary decrease in volumes Demand. When determining the volume Demand all these factors must be taken into account.

Tip 2: How to determine the demand for a product

An entrepreneur engaged in trade wants,that his goods were in demand and quickly sold out. But it does not always happen, especially when it comes to some novelty unfamiliar to a wide range of potential buyers. The product may be of interest to people, or may be stale for a long time, bringing a loss instead of profit. Therefore, we must first determine whether it will be in demand.

Instructions

Conduct a marketing analysis, that is, studythe ratio of supply and demand to similar products in your region. Determine the average market prices, the average speed of goods turnover, the approximate rate of profit. On the basis of the data studied, it is possible to determine with sufficient confidence whether there will be a sense in selling this particular product, or not.

Try to determine the target audience, thenthere is a conclusion, which category of buyers will purchase your goods. It depends on many factors, first of all, on the age and financial well-being of potential customers, as well as on the location of your store. For example, if you sell food, and your store is located in a residential area where the majority of the population are people of modest means, then it is hardly worth offering them delicacies from the category of the highest price category. But in the center, where more wealthy people live, where many offices of reputable companies are located, such a commodity may well be in demand.

If possible, conduct a survey of potentialconsumers. Print the questionnaires and distribute them to your customers, as well as other stores located in your area. You can distribute these sheets among employees of enterprises, institutions, asking them to fill in and leave them at the checkpoint. Try to keep the list of issues brief (not to tire and not to irritate a potential client), but at the same time exhaustive. Based on the results of the study of the answers, you can form a more or less objective picture of customer demand and conclude: is it worth to sell this group of goods, or is it likely that they will not find demand.

If you have a network of dealers-distributors,you can give them small lots of goods for sale, and see how the trade goes. The goods will be quickly sold out - it makes sense to engage in its sale on a larger scale. Well, if he was stagnant, it's hardly worth betting on him.

Tip 3: How to determine the elasticity of demand, an example

Demand is the level of utility of one or anothergoods for consumers. To assess how it will respond to a change in price or an average level of income, you need to determine the elasticity of demand. This indicator is calculated as a ratio and expressed as a percentage.

Instructions

The elasticity of demand makes sense to find wheneach change of one of the following factors: the price of the goods, the level of income of consumers. On the basis of the obtained value, the economist can determine whether this will have a positive or negative impact on the company's profit. Accordingly, the management will decide, if necessary, to introduce corrective measures.

To determine the elasticity of demand, you needto have accurate information about prices and volumes of production of the beginning and the end of the period under consideration: Ketz = (Δq / q) / (Δp / p), where Ketz is the price elasticity coefficient, q is the quantity of the goods, p is the unit price.

By the same principle, the coefficient of income elasticity is calculated: Kad = (Δq / q) / (Δi / i), where I is the average consumer income.

The elasticity of demand is heavily influenced bythe prevalence and easy accessibility of materials for the manufacture of certain types of products. Inelastic are essential goods (food, medicine, clothing, electricity). In addition, they include items that are insignificant for the budget, such as pens, pencils, toothbrushes, matches, etc., as well as goods that are difficult to replace - bread, gasoline, etc.

The greatest elasticity in terms of demand isgoods that require rare, and therefore very expensive, materials to produce. Such products include jewelry products, the elasticity coefficient of which is much greater than one.

Example: determine the elasticity of the demand for potatoes, if you know that the average income of consumers for the year increased from 22,000 rubles to 26,000, and the sales of this product increased from 110,000 to 125,000 kg. Solution In this example, you need to calculate the elasticity of demand for income. Use the ready-made formula: Ced = ((125000 - 110000) / 125000) / ((26000 - 22000) / 26000) = 0.78. Conclusion: the value of 0.78 lies in the range from 0 to 1, , the demand is inelastic.

Another example: find elasticity in demand for fur coats with the same indicators of household incomes. Sales of fur coats have increased in comparison with the last year from 1000 to 1200. Decision.Cad = ((1200-1000) / 1200) / ((26000 - 22000) / 26000) = 1.08. Output: Cade> 1, this is the subject luxury, demand elastic.

Tip 4: How to determine the amount of procurement

It is very important for the business to properly plan the volume of the purchase of goods. So, any discrepancy of the quantity of the goods with the necessary demand can significantly reduce the profit of the enterprise.

You will need

- financial documentation of the company;
- sales reports of the past months.

Instructions

To find out the quantity of the necessary goods, check the cash flow of the enterprise. To do this, evaluate all the documents of the company, which clearly show its financial position and livelihood.

Guided by the indicators of the first purchase,analyze the sales and balances of the company's goods in the warehouse. Analyzing the first period of the enterprise's work, evaluate the demand of consumers, your range of products and prices, planned and real sales.

Analyze the work of marketing. The empty shelves in the store, as well as the excess of goods in the warehouse - an unacceptable luxury. Evaluate sales in different regions and, based on this, draw a conclusion.

Adapt to each individual situationdifferently. Each industry has its own specifics of sales, so before buying, study the work of each segment well. Remember that the product may lose its relevance (for example, new developments in household appliances), go out of fashion (clothes) or deteriorate (food).

Tip 5: How to determine the elasticity of demand at a price

Demand is one of the key conceptseconomy. It depends on many factors: the price of the goods, the income of the consumer, the availability of substitutes, the quality of the product and the taste preferences of the buyer. The greatest dependence is revealed between the demand and the price level. Elasticity Demand by the price shows how much consumer demand has changed with an increase (decrease) in prices by 1 percent.

Instructions

Determination of elasticity Demand It is necessary to make decisions about the installation andrevision of prices for goods and services. This gives an opportunity to find the most successful course in the company's pricing policy in terms of economic benefits. Use of data on elasticity Demand allows to identify the reaction of the consumer, as well as to direct production for the forthcoming change Demand and adjust the market share occupied.

Elasticity Demand by the price is determined by means of two coefficients: the coefficient of direct elasticity Demand by the price and the coefficient of cross elasticity Demand by the price.

Coefficient of direct elasticity Demand by the price is defined as the ratio of the change in volume Demand (in relative values) to a relative change in the price of the goods. This ratio shows how much demand increased (decreased) by a 1 percent change in the price of goods.

The coefficient of direct elasticity can takemultiple values. If it is close to infinity, this indicates that when the price decreases, the demand of buyers increases by an indefinite amount, but when the price increases, they completely refuse to buy. If the coefficient exceeds unity, then the increase Demand occurs at a faster rate than decreasesprice, and vice versa, demand is reduced by more rapid topics than the price increases. If the coefficient of direct elasticity is less than one, an opposite situation arises. If the coefficient is equal to one, then the demand grows at the same rate, which reduces the price. With a coefficient of zero, the price of the product does not have any effect on consumer demand.

Coefficient of cross elasticity Demand by the price shows how much the relative volume has changed Demand for one product when the price changes by 1 percent for another product.

If this coefficient is greater than zero, then the goods are considered interchangeable, i.e. The increase in prices for one will invariably lead to an increase Demand another. For example, with a rise in the price of butter, demand for vegetable fat may increase.

If the coefficient of cross-elasticity is less thanthe goods are mutually complementary, i. with an increase in the price of one product, the demand for another decreases. For example, with an increase in gasoline prices, demand for cars is falling. With a coefficient equal to zero, the goods are considered independent, i.e. a change in the price of one good product does not affect the amount Demand another.

Tip 6: How to determine the elasticity of demand

The elasticity of demand makes it possible to determinethe change in the demand of buyers when any factor that influences their choice changes. The most important determinants determining demand are the price of the goods.

Instructions

The elasticity of demand for price shows the degreequantitative change in demand when the price changes by 1%. It is calculated as a percentage of the change in the magnitude of demand to the change in the market price of the commodity.

Dependence of the volume of demand on the price canexpressed in different ways. If the price of the goods decreases by one percent, and the amount of goods purchased increases at a lower rate, then they say that inelastic demand. With elastic demand, while the price of the goods decreases by 1%, demand for it increases at the fastest rates. With a single elasticity, when the price is halved, demand also doubles; The rate of decline in prices and the growth rates of demand are the same. If the demand is absolutely not elastic, then any change in price does not affect the volume of demand.

The elasticity of demand for a price is determined byseveral factors. It is influenced by the availability of substitute products on the market. The more of them, the more elastic the demand. These products include food. But, for salt, which has practically no substitutes, the demand is inelastic. In addition, the elasticity depends on the proportion of consumer income attributable to the product. The higher it is, the greater the elasticity. The elasticity of demand also depends on the degree of necessity of the given product for the buyer, the variety of possibilities for using the acquired goods, the time of adaptation to the price change.

There is also a cross-ratioprice elasticity of demand. It shows the relative change in the volume of demand for one product when the price changes to another. If this coefficient is above zero, then there is an interchangeability of goods, i.e. when the price of one product rises, demand for another increases. For example, when the prices for potatoes increase, the demand for pasta will increase.

If the elasticity coefficient is greater than zero, thenspeak of the complementarity of goods, i.e. when the price of one commodity rises, the demand for another falls. For example, when gasoline prices rise, demand for cars decreases. With an elasticity coefficient of zero, the goods are independent, i.e. The increase in the price of one product does not in any way affect the level of demand for another.

Tip 7: How to determine the equilibrium price and the equilibrium volume

We all know what the market is. Each of us makes daily purchases. From minor - buying a ticket on the bus, to large-scale - buying houses, apartments, renting land. Whatever the market in its structure: commodity, stock - all its internal mechanisms are inherently the same, but nevertheless require special attention, since a person can not do without market relations.

Instructions

To find the equilibrium Price and the equilibrium volume, it is necessary to determine the seriesfactors. Such as the magnitude of demand and the magnitude of supply. These market mechanisms act on balance. There are also various market structures: monopoly, oligopoly and competition. In the monopoly and oligopolistic markets, calculate the equilibrium Price and the volume does not follow. In fact, there is no balance there. The monopoly firm itself establishes Price and the volume of output. In oligopoly, several firms, joining the cartel in the same way as monopolists control these factors. But in competition, everything happens according to the rule of the "Invisible Hand" (through supply and demand).

Demand is the buyer's need for some kind ofproduct or service. It is inversely proportional to the price and therefore on the graph the demand curve has a negative slope. In other words, the buyer always seeks to buy more volume of products at a lower price.

The number of goods and services ready to deliver onmarket sellers - this is an offer. Unlike demand, it is directly proportional to the price and has a positive slope on the graph. In other words, sellers tend to sell more goods at a higher price.

It is precisely the point of intersection of supply and demand forthe graph is treated as an equilibrium. What is the demand that the sentence in tasks are described by functions in which two variables are present. One of them is the price, the other is the volume of output. For example: P = 16 + 9Q (P - price, Q - volume). To find the equilibrium Price should be equated with two functions - supply and demand. Having found the equilibrium Price, you need to substitute it in any of the formulas and calculate Q, that is, the equilibrium volume. This principle also operates in the opposite direction: first, the volume is calculated, then the price.

Example: The equilibrium Price and the equilibrium volume, if it is known that the quantitydemand and supply are described by the functions: 3P = 10 + 2Q and P = 8Q-1 respectively. The solution: 1) 10 + 2Q = 8Q-12) 2Q-8Q = -1-103) -6Q = -94) Q = 1.5 ( this is the equilibrium volume) 5) 3P = 10 + 2 * 1.56) 3P = 137) P = 4.333 Ready.