The market is a mechanism for the formation of prices for goods, production volumes and their subsequent sale. The driving elements of the market mechanism are supply, demand, competition and price. When planning the entry-level price, it is necessary to determine the volume of demand based on the analysis of the market and sales volumes.
Instructions
Step 1
When determining the volume of demand, it is necessary to establish the amount of goods that consumers will buy for a certain period of time. However, keep in mind that lower prices significantly increase the number of buyers and demand. When the price of goods rises, the volume of demand will decrease. That is, there is a certain relationship between the price of the product and the amount of the product sold.
Step 2
The volume of demand is equal to the product of the price by the functional indicator of the price by the amount of demand.
Step 3
The volume of demand is influenced not only by the price set per unit of goods, but also by many other factors. Reduction or increase in consumer income, respectively, requires fixing or lowering the price. As income rises, consumers buy better quality goods.
Step 4
Remember that the appearance of complementary or substitute products on the market can also lead to a decrease in demand. Since there are many similar goods on the market, and their prices also do not differ much from each other, the market is saturated with one category of goods.
Step 5
Changes in consumer preferences and tastes, their price expectations, and advertising costs also have an impact. For example, the strengthening of anti-alcohol propaganda or the fight of society against smoking causes a decrease in the volume of demand for such categories of goods. However, changes in habits in society are relatively slow, and regardless of the reasons for the change in tastes, the volume of demand also fluctuates.
Step 6
If there is a shortage of goods on the market and expectations of future price increases, there is an increase in the volume of demand in a certain period. Consequently, the expectation of an upcoming sale of goods or the appearance of a large number of similar goods leads to a temporary decrease in the volume of demand. When determining the volume of demand, it is necessary to take into account the presence of all these factors.
