There are two main actors in each market: seller and buyer. The size of supply and demand for any product (service) depends on them. Market demand is the volume of products, goods that consumers will buy at a certain price in a specific unit of time. Supply - the amount of goods (services) that manufacturers are ready to provide at the same time at a given cost.
Market demand is influenced by many factors. The main one is cost. So, with a high price, the level of demand will be much less than with a low one. An inverse relationship is observed in the proposal. That is, at high cost, manufacturers are ready to provide more goods (services) to the market.
Market demand is formed not only under the influence of prices. Consider other factors affecting purchasing power. This is, above all, consumer income. The more money people have at their disposal, the higher the level of demand.
Significantly on purchases affect consumer expectations. If people believe that in the near future prices for certain goods will rise, then the demand for these products can grow significantly. Consumers will simply stockpile for the future. Accordingly, after a short period of time , sales will decrease again.
Supply and demand in a market economy is highly dependent on fashion. If clothes, shoes and accessories are in line with modern trends, then young people are trying to buy them. At the same time, fashionable goods can be quite expensive. But after 1-2 seasons, these models will cost 3-5 times cheaper, while there is practically no need for them.
Market demand is also influenced by advertising. If the seller does not spare money on disseminating information about his product in the media, then buyers even try to try the novelty for fun. If they like the goods, then demand subsequently only grows.
The next factor is the quality of the product (service). Consumers, of course, will give preference to higher quality products. This indicator is especially important for wealthy people. First of all, they value comfort and reliability in things.
An important non-price factor is traditions, customs in the family, group of people, nationality, country. For example, on the eve of a holiday that is celebrated only in a certain state, the demand for gifts will increase. In other countries, such a situation will not be observed.
The level of income of the population also affects demand . An increase in wages, the issuance of the thirteenth salary, bonuses, etc. significantly increase customer demand. People are willing to spend more money on benefits. Accordingly, the emergence of crisis situations causes a strong decline in sales.
Demand is divided into elastic and inelastic. The first type concerns products that have several analogues. That is, if a product with elastic demand suddenly rises in price, and a similar product of a different brand is sold a little cheaper from a competitor, then the buyer will buy for less. This applies to clothing, shoes, a number of food products. Inelastic demand are essential goods, for example, bread, milk, cereals, etc.
The situation of deferred demand is due to the fact that many products begin to rush in a certain time period, season. For example, people spend large amounts of money on warm clothes and shoes in early autumn, spring, and winter. Demand for sugar rises during the ripening period. And consumers take large eggs before a holiday like Easter.
We examined the concept of "market demand" and its factors. We found out that the actions of buyers are affected not only by the cost of goods and services, but also by many non-price reasons.