A Demand and Supply Graph
Factors Influencing Demand
This article serves to supplement the article Influences for Supply and Demand, that I wrote a while ago. For a more general overview of supply and demand, I suggest visiting there first.
Demand has many factors that influence a market, such as;-
- Changes to the prices to substitute products, such as cheaper products available online or at discount stores could reduce the sales of a premium product or product range.
- Changes to the availability of complementary goods or changes in the price of complementary goods, such as two large luxury opposing ice cream companies.
- Disruptions to the supply chain of competitors, such that their prices or other aspects change.
- The incomes of customers could rise, causing customers to choose superior or premium products, similarly, they could fall and choose less or inferior products, Especially prominent for Elastic products or Luxury Items.
- Advertising could increase consumer interest or make the product more noticeable to customers or potential customers.
- Branding or PR could be used more prominently or advertised.
- Recently companies have opted for using social marketing or guerilla marketing, as it can be more successful or noticeable since ad-blockers and the fall of cable TV and TV Advertising have made it harder to reach consumers.
- Advertising or Branding of other competitors products could also potentially boost your own profits, especially if the product is generic or seasonal.
- Changes to consumer incomes.
The demand for a product or service may also depend on the demographics of the product, if it is aimed at older people and the area is a student town, finding customers may be more difficult than other locations.
External Shocks, such as the economy or new technologies that make the product or service obsolete could also negatively affect the products demand if a business fails to innovate or adapt to change.