MARKETINGMR. LOCKE

Observing the Law of Supply and Demand

Macroeconomics

Studies the economic behavior and relationship of an entire society The US Department of Commerce An entire grocery store chain (Kroger, Wal-mart)

Microeconomics

Examines the relationship between individual consumer and producers

Studies how individuals make decisions about what to produce and what to consume

Marketers care most about microeconomics

Marketers and Microeconomics

Marketers care about information About how consumers make purchasing decisions How much consumers are willing to pay How a business’s competitors make decisions about

what and how much they will produce How much a business’s competitors will charge for a

product

Factors Affecting Demand

1-A need or want is particularly important or strong, a consumer may be willing to spend more money to satisfy it Buying t-shirts at a baseball game if the player has a

good game

Factors Affecting Demand

2-Available supply of products and services to satisfy needs A large supply will lower the value placed on that

product/service Shoe store with a large supply of Nike Shox,

consumers will pay less for them Shoe store with a small supply of Nike Shox,

consumers will pay more for them

Factors Affecting Demand

3-Availability of alternatives. If consumers believe there is no alternative, they are willing to pay more Gas-there are limited alternatives for gas-consumers

will pay more Pepsi-there are several alternatives for Pepsi-if the

price goes up consumers will buy the alternative

Demand Curve

Demand curve-the relationship between price and the quantity demanded

Demand curve-downward sloping

Law of demand-As the price decreases quantity demanded will increase

Supply Curve

Supply curve-the relationship between quantity supplied and price

Supply curve-upward sloping

Law of supply-When the price of a product is increased, more will be produced

Handling the Competition

Businesses consider the amount and type of competition Intense competition results in fewer opportunities Affects the supply curve

Economic resources-Natural resources, capital, equipment, and labor The specific types of resources a business has

available will determine the types of products and services it can develop and sell

Affects the supply curve

Supply and Demand Curve

The intersection of the supply and demand curve-Market Price, or Equilibrium