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Chapter 2: The Consumer

This chapter explores consumer demand and supply using the case study of The Pet Hotel. Learn how the business tailored its services to meet customer needs, the effectiveness of word-of-mouth marketing, and the relationship between promotions spending and supply and demand. Additionally, important considerations in the business plan are highlighted.

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Chapter 2: The Consumer

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  1. Chapter 2: The Consumer BMI3C Mr. Whiler

  2. 2.1 Consumer Demand • Read “The Pet Hotel” page 36-37 • discuss • How did she tailor her business to meet customer needs? • Why is word of mouth effective in this instance? • How does her promotions spending relate to supply and demand? • What important considerations were noted in her business plan?

  3. 2.1 Consumer Demand • Consumer • a person who uses a product • Customer • someone who buys a product • they may not be the same person • children are consumers but not customers • sometimes a gatekeeper makes decisions • marketers need to understand who they are marketing to...

  4. 2.1 Consumer Demand • Needs • something you require to live • food, protection, water, affiliation, etc. • Wants • things beyond what is needed to survive • gourmet meals, iPads, hockey sticks • while you might want a fancy meal, a simpler meal will keep you alive REMINDER!!!

  5. 2.1 Consumer Demand • consumer demand is important to understand • example: it is useless to market luxuries to people without food • values change quickly • technology changes the value of objects • new trends • social pressures • changes in life • cost

  6. BASIC ECONOMICS

  7. Markets • Doesn’t have to be a physical location • They exist only when consumers / producers come together to exchange goods / services for money • So a market could be a store where you buy jeans or eBay

  8. Markets contd. 2 major types of markets 1) consumer market “B2C” • Made up of all the things we use for personal consumption 2)business to business market “B2B” - made up of all the companies which sell things to other businesses

  9. Have you ever wonderedwhat determines the pricesof the things you buy?

  10. It comes down to supply vs. demand

  11. Demand • Represents the consumer side of the market • How much of particular good/service do consumers want • 3 things determine the level of demand • Desire , Ability to pay , Willingness to pay

  12. Supply • Represents the manufacturer side of the market • How much of a particular good/service can the manufacturer provide/is willing to provide

  13. The battle between supply and demand demand supply

  14. Demand for tootsie pops in Rustonia Point A B Price 20 40 Marketdemand 700 500 Price B A Demand Quantity

  15. Demand for tootsie pops in Rustonia Point A B C Price 20 40 60 Marketdemand 700 500 350 C Price B A Demand Quantity

  16. Demand for tootsie pops in Rustonia Marketdemand 700 500 350 200 Point A B C D Price 20 40 60 80 D C Price B A Demand Quantity

  17. So what do we notice about the Demand CURVE • As the price of a good decreases demand for the good will increase

  18. Supply for tootsie pops in Rustonia Supply Price Point A Price 20 Supply 100 A Quantity

  19. Supply for tootsie pops in Rustonia Supply Price B Point A B Price 20 40 Supply 100 200 A Quantity

  20. Supply for tootsie pops in Rustonia Supply C Price B Point A B C Price 20 40 60 Supply 100 200 350 A Quantity

  21. Supply for tootsie pops in Rustonia Supply D C Price B Point A B C D Price 20 40 60 80 Supply 100 200 350 530 A Quantity

  22. So What do we notice about THE SUPPLY CURVE • As the price of a good increases supply of the good will increase

  23. But how does all of this determine the price of goods?

  24. The market is said to be in equilibrium when supply equals demand It’s something called Equilibrium

  25. Combining the supply and demand curve for tootsie pops in Rustonia Supply Market is in equilibrium Demand = Supply Price Demand Quantity

  26. Scenarios When the Nintendo Wii was introduced…demand was very high but supply was low What happens when demand exceeds supply? Result?? prices skyrocketed !!! people were able to charge hundreds of dollars more for the Wii than they had purchased it for

  27. Scenarios When PS4 was introduced, demand for PlayStation 3 dwindled because people would rather buy the latest version; however supply was high. What happens when supply exceeds demand? Result? the price of PlayStation 3 dropped dramatically as retails just wanted to get rid of the product.

  28. Other Scenarios The price of Hallowe’en candy on October 25 vs. its price on Nov 1 Consider … The price of Christmas decorations on December 1 versus December 26 Why can’t I find a BBQ at Canadian Tire in October? Why can’t I find a snowblower in May?

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