Demand Factors

The market, above all, is the very sphere where demand and supply interact . Thus, the aggregate of buyers is a force that shapes the demand for different groups of goods on the market. There are certain factors that determine demand. However, to begin with, it is necessary to understand what the concept itself means.

Demand is an indicator of the solvent demand of buyers in a particular product and this fixed price. It is characterized by its magnitude. It determines the willingness of the consumer to purchase this product in this price category. Here we mean a combination of simultaneous necessity and the possibility of buying the specified product in a specific quantity. Obviously, demand only indicates a potential solvent demand. In other words, its value informs us about the quantity of goods that buyers can and will buy. And this does not mean that the deal will take place. Suppose that a manufacturer can not cover its demand for a product with its capacities. There is also such a concept - individual demand. This is a value that characterizes the needs and opportunities of a particular customer. And, at last, the general demand is defined by all set of clients which form the market.

The economy studies little individual demand, since the factors determining it in such a narrow segment practically do not give any idea of the overall picture. For example, a single buyer may not feel the need for a product that is generally very popular.

Demand factors for convenience are divided into two groups. Consider price and non-price determinants. At the same time, it is necessary to understand that they mutually influence and mutually change each other.

Price factors of demand

• Actually, the price of a commodity is quite obvious the interdependence of value and demand among themselves.
• The price of the linked product. Here, the relationship works in different ways. For example, an increase in the price of tea will lead to an increase in demand for coffee, while an increase in the cost of gasoline will lead to a decrease in the demand for technology that uses such fuel in its work.

Non-price factors of demand

• The amount of income consumers. The increase in wages will necessarily lead to an increase in demand. The only thing to consider is that it will not grow on all product groups, but for some - even fall. So, the demand for low-quality, and, consequently, cheap products will collapse dramatically. That is, growth will be observed only in the normal and higher categories of goods, while the lower category will be unclaimed.
• Demand factors include and not the most obvious things. It's fashion and taste. After all the consumer is inclined under the influence of various factors, including advertising, to change the preferences that will lead to change of demand. This determinant has little effect on goods intended for long-term use.
• Number of consumers. There is an obvious relationship. If the number of buyers increases, then naturally the demand grows. This is often associated with migration of people, population change.
• The price of substitutes. If the product has an analog, which is designed to perform the same functions, then the following pattern will be observed. Falling prices for analogs will lead to a decrease in demand for this product, and vice versa, an increase in their cost will significantly increase it. This factor does not affect the product if there are very few or no substitutes.
• Consumer expectations. A factor that is difficult to take into account in models, since it is difficult to predict. For example, consumers decide that tomorrow there will be a deficit of a certain commodity and purchase all its possible reserves.

Conclusion: the impact of any type of demand for a product depends significantly on the product itself.