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Conceptual Structure of Demand Model

TID. RD/N. Conceptual Structure of Demand Model. Firm Demand = Total Industry Demand * Market Share Define Market Share = Firm Demand / Total Industry Demand Market Share = Firm Demand / (Avg. Demand * Number of Firms) Market Share = Relative Demand / Number of Firms

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Conceptual Structure of Demand Model

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  1. TID RD/N Conceptual Structure of Demand Model Firm Demand = Total Industry Demand * MarketShare Define Market Share = Firm Demand / Total Industry Demand Market Share = Firm Demand / (Avg. Demand * Number of Firms) Market Share = Relative Demand / Number of Firms Firm Demand = Total Industry Demand * (Relative Demand / N) Macro-economic Influences Seasonal Patterns Stage of Life Cycle Exogenous Demand Industry Activity Pricing, Promotion, Quality Endogenous Demand FD Competitive Profile Relative Pricing, Promotion, Quality, and Loyalty Relative Demand

  2. TID Exogenous Demand Endogenous Demand Macro-Economic Influences - Seasonality - Stage of Life Cycle Estimate Trend and Seasonality using Time Series Analysis Industry Behavior - Pricing (Avg Price) - Promotion (Avg. Advertising) - Product Quality (Avg. R&D) Estimate weights of these factors using Regression Analysis Total Industry Demand

  3. Pricing Relative Price (PREL) RD Promotion Loyalty Relative Advertising RD1 (t-1) Quality Relative R&D Relative Demand(Measure of Market Share) RD is firm specific and a measure of market share, the predictor variables should also be relative to industry averages. For example, relative price of the firm is PREL = Firm’s Price / Industry Avg. Price

  4. A DSS for Estimating Demand

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