FACTORS AFFECTING DEMAND
1. PRICE OF RELATED GOOD
• Substitute goods
Let us analyse the four wheeler industry through its usage- commercial and passenger.
Passenger Vehicles: The number one substitute for 4 wheelers in India or rather the usage of 4 wheeler is the public transportation. If the ticket price is noticeably low, many people may choose to use public transportations. This is especially true for crowded cities and for millions of students around the world. In such a scenario, people would not want to buy their own personal 4 wheeler Consequently, this will affect the demand for 4 wheelers negatively. As followed, supply remaining constant, a fall in demand will cause a fall in price.
Again if there is an increase in the price
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An increase in the disposable income of the consumer implying an increase in his purchasing power of the consumer, would cause a rightward shift in the demand curve. In recent time we have seen that due to increase in the Income of the general public, there has been a shift from the Lower CC-segment cars to the Upper CC-segment cars. So, with higher income and a
3. CONSUMER EXPECTATIONS
The future expectations of the consumers range from common belief to individual belief that the price will rise or the supply would decrease or there might be a stockout. In either case, people purchase more or less automobiles. For example, currently, people think that the low demand for cars due to the slowdown in the world economy will bring the prices down. Therefore, they may have been postponing their purchases. However, determinants of the demand are not the only factors affecting the prices. To any change in demand, supply responds, too. Therefore, people postponing their purchases may not win as much as they expect.
Another important facet on consumer expectations with regard to price are brought to limelight during festive season. For say, during Diwali, consumers often expect discount bonanza offers from various automobile manufacturers. Owing to such expectations, they often delay their demands
4. ECONOMIC
Nordstrom may experience price elasticity as a risk since it is a challenge for the company to forecast customers behavior to price changes that can affect the retail’s goods of sale. Therefore, it is important to
Due to the existence of the automobile, the United States economy was changed forever. Originally, cars were hand made and only purchased by rich men due to their price. Due to Henry Ford, automobiles were eventually made available to the masses due to the fact that he concocted a way to produce the machine cheaper. This method was the assembly line, which impacted the amount of jobs available and the increased need of highways. The Geography of Nowhere, written by James Kunstler, discusses how the automobiles transformed America’s economy.
Often, individuals with higher income have flexible regarding purchases considering that they have enough financial power to use on basic needs and to save. As a result, such individuals are expected to buy the company products in bulk or more frequently irrespective of the price of the products. On the other side, low-income earners are not expected to purchase the company products in bulk or frequently. Nevertheless, consumer income is widely affected by the rate of inflation which determines the amount of money they receive as salaries and wages as well as the prices of the company’s product. Inflation is widely defined as the continued increase in prices of products and consumers.
No matter the cost of gas prices, the stations will still be full since one of America’s top natural resources is gas and if gas prices go down income follows as directly
A Summary and Response to Andrew Leonard’s “Black Friday: Consumerism minus Civilization.” It all started in the 1960s; Someone thought that it would a good idea to make the day after Thanksgiving a great day for advertising for shopping for Christmas. Andrew Leonard covers this topic of how bizarre shopping has become in recent years in “Black Friday: Consumerism minus Civilization.” Leonard pokes fun at the consumers who rush these stores for the best deals offered up by the crazed advertisements.
3.1.3. Opportunities of Harley Davidson: 1. Asian & Europe Markets: The demand of the Harley Davidson in the developing Asian & European nations is increasing. There are very less number of players competing the Harley in this segment. Thus, it is a very attractive opportunity for Harley to capture these Asian & Europe markets aggressively.
Another aspect of Porter’s Five Forces model is the threat of substitution, or how easy it would be for another company to take over the present business by innovating in some way. The threat of substitution is low but still present in the trucking industry. Due to the fact that a large majority of freight moved in the United States is moved by truck, it would be difficult to shift to a different mode of transportation. However, there are still other methods of travel that can be used, for example freight can be moved by airplane or by train within the United States. These alternative modes of transportation tend to be more expensive though, meaning it makes more sense for a company to simply purchase the services of a trucking company.
Price and demand of an item is significant viewpoint which must be considered by Toyota in promoting economy as price and demand impact purchaser what to purchase. Customer’s demands all the more in lower price and less at higher price. Price elasticity of demand is a measure of the greatness by which customers modify the amount of some item that they buy in light of progress in the price of that item Boyes and Melvin (2012). Price elasticity of demand will help Toyota to decide the amount an
2.2 Industry Analysis - Porter’s 5 Forces Analysis Threat of Substitutes Bicycles and services from unknown manufacturers can provide huge substitution threats. Just as alarming for bicycle manufacturers is the internet: it is developing as an excellent medium for cheap marketing services. The price that consumer are willing to pay for a product is depends the quantity and the availability of substitute products. When a close substitute for a product is exist, industry profitability is suppressed because consumer will pick out if the price are high. Example consumer will compare the price of other bicycles with this bicycle in terms of quality and appearance, a customer can easily get another bicycle which is less difference but in more cheaper
Introduction: The invention of the automobile has brought more positive and negative effects than any other invention throughout transportation history. Transportations have changed the way people live all over the world. Automobile companies have created numerous jobs all around the globe. Automobiles have affected all aspects of society such as family life, the economy, and even the environment.
Political environment includes laws, government agencies, and pressure group that influence and limit various organizations and individuals in a given society. Economic environment consists of economic factors that affect consumer purchasing power and spending patterns. Social factors include the demographic and cultural aspects of the external macro environment. In which demography is the study of human population in terms of size, density, location, age, gender, race, occupation, and other statistics; cutural environment consist of institution of other forces that affect society’s basic values, perceptions, preferences, and behaviors. Therefore, these factors have an impact on customer’s needs and size of potential markets.
Exchange rate between different countries differs on their economy. 3. Social factors Social factor is related to growth of population. Increase in population growth creates demand in automobile industry and the sale of Mercedes Benz will increase.
SUMMARY In this report, I am explaining how the impact of External Business Environment on Automobile industry in UAE. Also, how the external environment factors are dominant on the growth of an industry including dimensions of management, human resource, marketing and IT tools used in the Industry. INTRODUCTION
Firstly Needs and trends are major macro-environment variables that affect Vadilal. Enterprising individuals and companies manage to create new solutions to meet unmet needs. It is important for the Vadilal to understand its customers needs and then produce the products accordingly. If they fail to understand their customer needs then they will have to incur losses as people will not be satisfied with their products. Trends reveal the shape of the future and can provide strategic direction.
This is also where price mechanism takes place because any changes in demand and supply, will affect the price, and eventually balancing the demand to be equal to supply. This is the reason why consumers and producers have no control over the price, and in this situation, everyone is considered as price takers. This causes a horizontal line in the demand curve for the firm’s product(s), as can be seen in Figure 1 (b). Figure 1 There are barely any barriers to enter this market, making it easy to enter and exit according to the firm’s capabilities.