Every business owner should have knowledge of economics and the law of demand and supply, no matter how rudimentary it may be.In the study of economics, the law of demand and supply states that when demand of a product or commodity increases and the supply stays the same, then prices are expected to go up.In the same manner, when the demand for the product or commodity decreases, its price in the market is normally presumed to go down.By studying market trends, evaluation of the demand of the target market, and even the prices of related products, an entrepreneur will be able to increase demand and maximize profits.
First of all as a businessman, you need to analyze the current demand of your product. The demand and supply relation can be determined by doing an analysis of the trend in the market.Once you have outlined the demand patterns of your customers, you can then set about controlling the supply of your product.Taking into consideration the shelf life and expiration date of your product from the date of manufacture, you need to be able to manage the number of your product supply to ensure that this is just enough for the available demand. When your product supply exceeds too much the market’s demand and the products end up in spoilage, then this means decreased profits.
There are a number of instances which may positively or adversely affect the demand and supply of a particular product.For example an increase in the income of the targeted customers will in turn boost the demand of the marketed product.This is because the customers are given an increased buying capacity.Moreover the increase or decrease of prices in related commodities will also affect the demand of a product.If a related commodity’s price decreases vis-à-vis the product, then there is an expected demanded for the reduced-price product and a lower demand for the marketed product.
However, there are also strategies that can be done to take advantage of the law of demand and supply.Entrepreneurs can actually control the supply of their products to increase product demand and command higher prices.This is normally what is being done with high-end, luxury goods such as designer clothing, cars, shoes, jewelry collections, and art pieces. Manufacturers of these products would typically release limited editions of the products in the goal of acquiring more demand (due to the exclusivity of the product) and placing a higher price tag (due to the limited supply and already increased demand).
A good knowledge on the realm of economics will certainly propel the marketing efforts of any business venture to elevated heights.An entrepreneur will be able to determine the number of reasonable output per day depending on the patterns of the consumers’ demand.Product pricing can also be determined by studying the demand on a certain commodity, as well as the pricing range of related commodities.The demand and supply market trends are insightful tools for any business owner in steering his trade to better consumer response and maximized revenues.
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