Marketing Demand. Types of demand in marketing Situation occurs when demand fluctuates

Depending on the state of demand in the market, it becomes necessary to apply different strategies or types of marketing.

There are the following types of demand: negative, its absence, hidden, falling, irregular (seasonal), full, excessive and irrational.

In order to manage demand, various marketing types: conversion, stimulating, developing, remarketing, synchromarketing, supporting, demarketing, counteracting marketing.

conversion marketing is used in case of negative demand and provides for the development of such a marketing plan (a set of measures for advertising, promotion, etc.) that will help to resume growth in demand for the relevant goods and services

promotional marketing associated with the availability of goods and services for which there is no demand due to the disinterest or lack of information of consumers. Therefore, a set of marketing activities is being developed that significantly stimulates consumers to generate demand.

Developmental marketing are used when it is necessary to form demand for new goods and services, therefore its task is to intensify marketing activities to turn potential (hidden) demand into real.

Remarketing is a special set of measures to revive falling demand in a certain period of the life cycle of goods and services (advertising, special discounts, benefits, etc.).

Synchromarketing used for fluctuating or seasonal demand to stabilize sales, leveling and minimizing the effects of demand fluctuations (for example, passenger traffic in summer and winter) by introducing noticeable special discounts on prices (tariffs) during a recession, introducing various benefits and additional incentives for consumers.

Supportive Marketing is used for full demand, when the volume and structure of demand for goods and services fully correspond to the level and structure of supply. The task of this type of marketing is to maintain interest in such goods and services in a more relaxed normal mode.

Demarketing is a set of marketing activities to counteract excessive demand in excess of supply for goods that consumers need until the moment of increasing their output (reducing advertising, some price increases, etc.).

Counter marketing is used to reduce demand for goods that are regarded as irrational from the point of view of society and consumers (alcohol, cigarettes, etc.). In this case, anti-advertising, a ban on advertising, price increases, and the release of special information explaining the irrationality of such goods are applied.

Almost all of the listed types of marketing should be used in the transport services market, especially synchromarketing, remarketing, developing and counteracting, in particular, to equalize the seasonal transportation of goods and passengers during periods of decline in demand for transport services.

Control questions

1. List the types of demand and give them a brief description.

2. Name and describe the types of marketing depending on the state of demand in the market.

COMPREHENSIVE MARKET RESEARCH

The concept of market research

A comprehensive study of product markets is one of the main functions of marketing. This is the basis of a marketing strategy.

It includes the following items.

1. Study of goods (services):

novelty and competitiveness;
compliance with legal regulations;
ability to meet customer requirements;
the ability to improve the product in accordance with the ever-increasing requirements of customers.

2. Market research:

geographical position;
market capacity, sales volume;
commodity structure;
methods and ways of studying the market;
development trend (forecast).

3. Studying competitors:

the main ones, which own the largest market share;
competitors that are developing their activities most dynamically;
trade marks (signs) of goods of competitors;
features of competitors' products for which they are purchased by buyers;
forms and methods of marketing activities;
the channels of distribution and distribution used;
the main directions of product improvement;
official data on the profit of a competitor;
trade image of competitors.

4. Study of buyers:

characteristics of buyers;
typical uses of the product;
incentives for buying;
factors that shape consumer preferences;
segmentation;
purchase methods, time of purchase;
needs not satisfied by the product;
study of legal aspects
legal norms;
legal institutions that can provide advice if necessary.

A full-fledged market analysis involves a consistent step-by-step passage of all the listed elements of the study. At the same time, the results obtained at one stage may require data correction at other stages. Only systematic and comprehensive market research will allow you to get reliable and reliable results.

For a particular enterprise, in accordance with the specifics of its activities, the ratio, the degree of importance of each of the elements of marketing will be different. Moreover, the ratio of the main elements of marketing in terms of their importance for the success of an enterprise in competition, in order to achieve high financial results, is constantly changing over time in all industries, depending on changes in the structure of production costs and the economic environment in which enterprises operate. However, this does not mean that one of the elements of marketing can be neglected.

Marketing research of the market can be divided into permanent and episodic. Each of them is carried out according to a specific scheme and includes the following steps:

formulation of research objectives, problem statement;
data collection - from primary sources (personal interview, survey, questionnaire) or secondary (report, publication);
systematization and analysis of information;
interpretation of results, formation of conclusions and recommendations;
preparation and submission of a report containing the results of the study;
evaluation of measures taken on the basis of research.

Product study

A product (service) is a complex multidimensional concept, but the main thing in it is consumer properties, i.e. the ability of a product and service to perform its function - to satisfy the needs of the one who owns it.

Another important provision in connection with a product or service is the need to design it with a clear focus on a specific, pre-identified target group of potential buyers.

It is especially profitable to produce a product or service of “market novelty”, i.e. one that either:

opens up the opportunity for the consumer to satisfy a completely new need (the so-called "pioneer" product);
raises to a new qualitative level the satisfaction of an ordinary well-known need;
allows a wider range of buyers to satisfy a known need at a certain level.

Market novelty products and services are key to the commercial success of an enterprise.

The first decision made by a manufacturer when deciding to enter the market with a new product (service) is the choice of the type (s) of products offered, taking into account the intended buyers: goods (services) for personal use or industrial purposes. This categorization is important because it highlights the differences in product features and the subsequent actions of marketers.

Goods and services for personal use are goods and services intended for the final consumer, for personal, family or household use. The main feature is application, not a specific entity. For example, a calculator, a telephone, a vacuum cleaner are personal goods only if they are purchased for personal, family or household use.

Personal services fall into three broad categories. TO services related to the rental of goods, refers to the rental of goods for a certain period, for example, car rental, hotel rooms, transportation. Services With owned goods associated with the alteration or repair of goods owned by the consumer. Examples include repair services (car, clock and plumbing), home gardening, car washing, hairdressing and dry cleaning. The third kind - provision of personal services of a non-commercial nature such as bookkeeping, legal services and training.

Goods and services for industrial purposes acquired for use in the production of other goods, services or for economic activity. These include heavy equipment, raw materials, finished parts, inventory, cleaning and security services, cash registers. Buyers include industries, wholesalers, retailers, government or other non-profit organizations.

Industrial services are also divided into three main types. Maintenance and repair services include painting, equipment repair and cleaning, security; business advisory services– management consulting, advertising agency services, accounting and legal services; services related to the rental of goods - leasing of industrial equipment, freight transportation.

All services are intangible, cannot be stored, the manufacturer and his services are inseparable. They are often purchased on a contract or hire basis, and some firms do them in-house. General principle: services can be performed by others, but they cannot be dispensed with.

Currently, there are several strategic approaches to creating a product or service (Fig. 2.1.):

modification;
pioneer;
imitation, joint with competitors;
random.

As can be seen from fig. 2.1, the most widespread in the creation of goods (services) received modification an approach, the content of which is a change in the qualitative characteristics of a product, service and / or service to them in accordance with the shortcomings identified from the buyer's point of view. It is the claims of consumers to already manufactured products, their service that serve as the beginning of the modification of goods and services, as well as the service to them. Therefore, most Japanese companies follow the path. It is known that the Japanese call themselves “great modifiers” and consider their strength to be the use of know-how to change the consumer properties of products.

Rice. 2.1. Basic approaches to product creation

The advantage of the modification approach to the creation of products is, first of all, its market orientation. Being a reflection of real, existing needs, it minimizes the risk of failure when the product enters the market, and therefore becomes the most effective direction for product development.

Another significant approach to creating a product or service is pioneer. The content of this approach is the creation in scientific laboratories, on the basis of fundamental scientific research, of fundamentally new products that provide the enterprise for some time with leadership, a monopoly position in the market. However, such a pioneering direction in the creation of goods is characterized by a high degree of risk. Thus, according to a survey conducted among the leading machine-building firms in Japan, only about 50% of fundamentally new products turn out to be profitable, while the share of “successful” modification products adequate to consumers is approximately 75%.

The main reason for this phenomenon is that the developers of pioneering, fundamentally new products, unlike manufacturers of modified products, are far from the market, they only approximately imagine the situation on it. Quite often, new developments wait for commercial development for many years.

In order to make the most of the results of fundamental developments, companies seek to involve as many specialists as possible in the study of the possibilities of their practical application. However, since fundamental research is a trade secret of the firm, the discussion is held primarily among its staff on the basis of the so-called “U-shaped” innovation process management system. The essence of this system is as follows: the highest echelons of the company's management, with the help of authorized representatives, gradually "lower" the new idea down, and then, as the discussion proceeds, "raise" it up. As a result, specialists at various levels develop their proposals, based on the analysis of which final decisions are made.

However, to date, no organizational measures have led to a change in the general trend: the risk associated with the creation of a range based on a pioneering approach is significantly higher than the risk that a company takes on by modifying a product based on market research results.

Approximately one seventh of the production is created on the basis of imitation approach, i.e. together with competitors, through the purchase of licenses or the creation of joint ventures, etc. Thus, marketing focuses on cooperation, communication in the implementation of innovations, and not on rivalry. Thus, recognizing the need to reflect competition from abroad, the United States amended its antitrust laws to allow competing firms to work together in research and development. In this regard, some American companies form temporary research and development partnerships with their competitors. These so-called strategic alliances can be seen as an interesting example of both the awareness of the problem and the practical response to it.

Thus, goods and services practically do not arise on their own, as evidenced by statistics: only 5% of product ideas appear by chance, which once again proves the need:

high-quality implementation of the analytical function of marketing, based on reliable information;
planning and managing the innovation process, taking into account the assessment of risks associated with the presence of different approaches to the creation of goods.

The technological chain for creating a product (service) includes the following steps:

search and selection of ideas;
commercial analysis of ideas;
research and development work (R&D);
pilot production;
trial sales;
batch production.

According to foreign data, in order to create a product for individual use that has commercial success (providing a “normal” profit), it is necessary, on average, to study about 60 ideas in order to get one that most fully meets the prospective requirements of the market. If we take as 100% the time required for the entire development cycle, i.e. from the birth of an idea to entering the market with a new product, then the following picture will emerge. Approximately 5% of the time is spent discussing the existing 60 ideas and leaving 15. Then 10% of the time is required to leave 5-6 promising ones after the commercial analysis. By the end of development in the design department (approximately 50% of the time elapsed since the start of work), 3 more ideas are eliminated. At the stage of market and laboratory tests, one or two ideas leave. And only after all this, the buyer sees the product in front of him.

Rice. 2.2. Scheme of product creation technology

Not every idea deserves further, even initial, development. At a minimum, it must meet the following requirements:

meet the goals and capabilities of the company, be technically feasible;
have sufficient market potential in terms of sales volumes of the future product (service);
provide a product or service with specific benefits;
ensure sufficient profitability of production.

If the idea as a whole satisfies all these criteria, the development of a specific concept of the future product or service begins. The essence of the concept is in a clear and precise statement of the distinctive features of a new product (service), which in the future will serve as a cornerstone in determining its market strategy. The concept of a new product (service) should clearly indicate what benefit the consumer can receive. This approach should be decisive throughout the development of the idea. Based on the intended concept, researchers and developers determine the physical appearance of the product.

A product (service), the high quality of which is beyond doubt, is subjected to a “market test” before the start of mass production - a trial sale is carried out in selected markets. This stage of marketing is mandatory in the case of the development of a consumer product and is desirable in the case of the development of an industrial product. The purpose of a trial sale is to obtain operational commercial information, so the main condition for organizing such a sale is accurate answers to the questions posed.

Table 2.1

Time spent on product marketing stages, %

A product or service is not always perceived by consumers in the same way. In order to determine the differences in the attitude of consumers to the product, in marketing there is the concept of the product life cycle.

Product life cycle (LCT)- this is the time of existence of the goods on the market, i.e. the time interval from the beginning to the end of its release and sale in its original form. Product life cycle theory is a concept that describes product sales, profits, and marketing strategy from the time a product is developed until it is withdrawn from the market.

The monitoring of the life cycle is carried out on the basis of the dynamics of two indicators, which, when graphed, form the following two curves: sales volume, gross profit. The time behavior of these indicators, reflecting the reaction of buyers to the product, makes it possible to distinguish several stages (or stages) of the life cycle: introduction, growth, maturity, saturation, decline (Fig. 2.3).

When examining the LCT, it should be kept in mind that the shape of the curve remains more or less the same for most products. However, the length of time and the intensity of the transition from one stage to another has great differences depending on the characteristics of the product.

Rice. 2.3. Curves of sales volume and gross profit depending on the stage of the life cycle of goods: - sales volume curve in value terms; – gross profit curve

Knowing the features of the stages of the life cycle is important, as it allows the company to develop specific marketing activities for each of them in order to extend the period the product is on the market, that is, the period during which it is in demand and makes a profit.

The first stage of the life cycle is implementation(or release) goods to the market. This is a difficult period for the manufacturer, since his products are still unknown to the consumer, who needs to be won over. At this stage, it becomes quite clear whether the buyer will accept the goods or not. In the latter case, the life cycle may turn out to be short, which means that the sale of the product will not bring a profit sufficient to cover the costs of its creation. The result may be a deterioration in the financial position of the company or even its bankruptcy.

At the implementation stage, marketing activities are mainly associated with adjusting the product to the target segment, i.e., changing its qualitative characteristics, which, as a rule, leads to additional investments in production. At the same time, serial production is still small; therefore, production costs are characterized by a high level. As a result, there is no profit, sometimes losses are possible.

Sales volume is relatively low because promotional and marketing efforts in both consumer and industrial markets take time to affect demand. The following circumstances also prevent sales:

the sales staff still does not know the new product well, its advantages and features, therefore, it is often presented to the buyer last; there is a need to educate and interest trading organizations;
representatives of the trade are reluctant to take the risk associated with the sale of a new product;
consumers, not knowing the new product, are in no hurry to purchase it, show restraint; only innovators are in demand.

However, at this stage of the life cycle, the producer also has advantages: he, as a rule, is a monopolist, which means that he has the opportunity to dictate his terms to the consumer. In a period when the manufacturer (seller) practically does not feel competition in the market, he can sell the goods at prices that include monopoly profit.

At the second stage of the life cycle, which is called growth stage, the product has already been tailored to the “targeted” buyer, who believed in its advantages and appreciated its high competitiveness. At this stage of the life cycle, the quality parameters of the goods are in full compliance with national and international standards.

The demand for goods is growing at a very high rate, and therefore, it is advisable to expand production, increase the utilization of production capacities. As a result, production costs begin to decline and, accordingly, prerequisites are created for lowering prices as a means of stimulating sales.

At the same time, the firm maintains its position as a monopolist. The few competitors that have appeared are most often limited to the sale of copy goods. Under such conditions, the manufacturer reserves the opportunity to sell products at monopolistically high prices, making an ever-increasing profit.

In a period of growth, sales promotion becomes strategic. Preference is more often given to advertising, which becomes aggressive, as the company does everything possible to convince the buyer of the advantage of its own product, and not copies of a competitor.

With the help of marketing at this stage of the life cycle, manufacturers seek to solve the following problems: to prevent increased competition due to product differentiation; ensure the effective operation of the distribution network for mass sales; organize an appropriate advertising campaign; earn monopoly profits by pursuing a policy of high prices.

The third stage of the life cycle maturity- is characterized by the full development of the technology of production of goods, which allows the company to concentrate its efforts on the problems of increasing labor productivity, as well as reducing production costs. Due to the profit received, it becomes possible to expand the range.

At the same time, the company faces serious problems, in particular, the number of competitors is growing, and the supply of goods begins to exceed demand. Accordingly, implementation difficulties arise. At the same time, the type of buyer changes markedly: purchases are mainly made by consumers with average incomes, and not by rich “innovators”. In this situation, the manufacturer seeks not only to expand the number of customers, but also to form a circle of regular customers (followers of the brand) with the help of such marketing activities as the provision of various discounts to the price, credit sales, seasonal and holiday sales, etc. It should be noted that that the effectiveness of advertising at this stage of the life cycle is reduced, since the product is already well known in the market, in connection with this, high costs for it during this period are hardly appropriate.

It is at the stage of maturity that the manufacturer begins work on creating a new product or modifying a product. This is necessary in order not to lead the company to a situation where the old product is no longer in demand and, accordingly, does not make a profit, and the company cannot offer a new, competitive one. As a result, it loses a buyer, its market share and becomes bankrupt.

The fourth stage of the life cycle saturation- is characterized by the most intense competition for the buyer, a significant excess of demand over supply, which is reflected in the dynamics of indicators characterizing the life cycle, i.e., the volume of sales and, to an even greater extent, the size of gross profit are decreasing. Fierce price competition leads to the establishment of sufficiently low prices, close to production costs, but even this does not cause a revival of demand. In the range of marketing activities at this stage of the life cycle, special attention is paid to the so-called pseudo-modification of the product, i.e., a change in the appearance of the product and its packaging that does not require significant costs. Thus, the impression is created of the emergence of new products that more fully meet the needs of buyers.

In the saturation stage, marketing still places a lot of emphasis on organizing advertising campaigns. At the same time, advertising acquires a new emphasis: special attention is paid to the brand name, and not to the quality and price of the product itself.

Finally, the last, fifth stage of the traditional life cycle is considered decline. This period is characterized by such painful phenomena for the company as an increase in inventory, a sharp drop in profits or the appearance of losses. The growing deterioration of the situation may be hampered by a good knowledge of the market infrastructure, as well as the use of established business relationships with consumers and competitors.

The transition from stage to stage occurs without sudden jumps, so the marketing department must carefully monitor the change in the pace of sales and profits in order to capture the boundaries of the stages. It is especially important to catch the stage of saturation and even more - the decline.

For a correct understanding of the product policy, it must be borne in mind that the buyer does not acquire the product, but the benefit that he will receive when he buys it. No one buys gasoline as such at a gas station (the buyer does not see it, does not try it), but the agent necessary to set the car in motion is bought, and if he is offered other, more effective means for this, he can buy them. Thus, a product is purchased only when it contains a benefit for the buyer.

In the development of the concept of the life cycle of a product in the United States, a Boston Advisory Group Matrix. This matrix is an important tool for carrying out assortment analysis, assessing the market prospects of goods, developing an effective marketing policy, and forming an optimal product portfolio for a company (Fig. 2.4).

Rice. 2.4. Boston Advisory Group Matrix

"Stars"- the most promising, developing type of product seeks to increase its share in the company's product portfolio, is at the growth stage. The expansion of the production of this product is due to the profit from its sales. "Stars" should be protected and developed.

"Cash Cows" goods at the stage of maturity; growth in sales is not significant; The product has the largest share in the company's product portfolio. It is the main source of income (of the company). Proceeds from the sale of this product can be used to finance the production and development of other products. Cash cows require strict control of capital investments and the transfer of excess financial revenue under the control of senior management.

"Difficult Children"(“Wild Cats”, “Question Marks”) - products with a very low market share with a relatively high growth rate in sales. May be at the implementation stage or at the beginning of the growth stage, require material costs; it is difficult to determine their market prospects (they can become “stars” or “dogs”). Requires additional research and funding. "Problem children" are subject to special study in order to establish their prospects for becoming "stars".

"Dogs"- Failed products. They have a relatively small market share (with a declining trend) and are characterized by low or no growth in sales volumes. Such a product is unpromising, it must be withdrawn from the market. “Dogs” should be disposed of whenever possible, unless there are good reasons for keeping them in the company's assortment.

With the successful passage of the life cycle, products from “difficult children” turn into “stars”, and subsequently into “cash cows”. If unsuccessful, “difficult children” turn into “dogs”.

The mission of service research in transport is to determine the needs of the market in services for the transportation of goods and passengers, the compliance of the services provided with the requirements of customers.

The study of transport services, on the one hand, shows the management of the enterprise what the consumer wants to have, what types of shipments and modes of transportation he most appreciates, and on the other hand, how to provide the clientele with new forms of transport services in order to ensure their implementation, what parameters to focus on attention to which of the cargo owners to target the services themselves and advertising on them, what new opportunities for the client the new model of transport service opens up.

The study of transport services covers many activities and is closely interconnected with other elements of marketing. The management of the transport enterprise and its divisions, knowing the reaction of cargo owners to new and traditional transport services, or simply catching changes in the needs of the clientele, must make the necessary changes in the organization and provision of transportation. In some cases, it will be necessary to find a set of additional services to improve the quality of transportation, expand the scope of the types of services recognized by the clientele, and change the attitude to the requests of the clientele. This must be done if it is possible to increase the volume of traffic and income as a result. In other cases, you should try to find additional opportunities to attract the attention of the clientele to new types of transport services.

The study of transport services is used in the planning and organization of transportation. In all cases, one should strive to introduce new services where the client most expects and therefore most likely to accept them. New types of transport services are implemented both autonomously and with the necessary improvement of the transportation process (different types of routing, changes in the plan for the formation and schedule of trains, passenger trains, etc.). It is quite possible that this cannot be avoided. The point is different. It is necessary to carry out all marketing activities in interconnection and adhere to a certain sequence of stages.

An unpleasant mistake can be the confidence of the specialists of the transport enterprise that their expensive project of introducing new services based on the achievements of scientific and technological progress will be approved and widely used by the clientele. It may be necessary to prove (and more than once, and more than one year) to a potential client the advantages of new types of transport services, drawing his attention to higher consumer and other properties.

Only when this circumstance is taken into account and the transport company begins to make appropriate adjustments in the organization of cargo delivery and in relations with customers and possible intermediaries, when non-traditional market relations and ways of informing the clientele are found, only then can the railway count on the desired commercial and financial success.

Control questions

1. What are the stages of marketing research of the market?

2. What is meant by a product of market novelty?

3. Give a description of goods and services for individual use.

4. Provide a description of goods and services for industrial purposes.

5. What are the main strategic approaches to product creation?

6. Give and describe the scheme of technology for creating goods.

7. List the basic requirements that an idea accepted for development in the form of a product must meet.

8. What is meant by the product life cycle and what are its stages?

9. Describe the main stages of the product life cycle.

10. List the goals that are set before the study of transport services.

Market research

A prerequisite for a market is the exchange of goods or services. For it to take place, the following conditions must be met.

1. There must be at least two parties entering into an exchange (seller and buyer).

2. Each side must have something that could interest the other.

3. Each party must be able to communicate and deliver its goods.

4. Each party must be free to accept or reject the proposal of the other party.

5. Each party must be confident in the expediency or desirability of dealing with the other party.

Exchange in its formation goes through three stages: self-sufficiency (lack of exchange); decentralized (barter); centralized (exchange through the market).

Since the key to the definition of the market is the exchange of goods and services between the seller and the buyer, this makes it possible to give a shorter definition.

The market is a sphere of exchange where a set of real and potential sellers and buyers operates. A market is also a place where a sale and purchase transaction takes place.

There are markets: commodity (goods and services); financial (securities market); labor market. In addition, markets are divided into domestic (national) and international.

The commodity market, according to the nature and purpose of the goods, is divided into the market of goods for individual use and industrial purposes.

Market of goods (services) for individual use is a market for goods or services of mass demand. In this market, goods and services are bought for personal consumption, family and home use.

Market of goods (services) for industrial purposes- a set of individuals and organizations that purchase goods and services for further use in production or resale to other consumers. It sells raw materials, materials, equipment, devices, devices, components. In terms of the size of the product range and money turnover, the market for goods and services for industrial purposes exceeds the market for goods and services for individual use. Purchases here are carried out by professionals based on a thorough analysis of the technical, economic and social aspects of the use of goods and services.

Manifestation of the needs of people in any product will be demand.

Considering the market as a system of relations between the seller and the buyer regarding the exchange or sale of goods, they note that the main elements of the market mechanism will be demand, price and supply. Specific forms of market relations will remain in quantitative and qualitative relations of the main elements of the market. Under the influence of these elements, the proportions between the production and consumption of goods are formed. The ratio of supply and demand determines the price of goods in the market.

customer demand acts as the most important element of the market, since it is based on the needs of people. The absence of needs determines the absence of not only demand, but also supply, i.e. no market relations at all.

Demand called the total sales of a product or service, which will be purchased at a specific price for a certain period.

Demand is expressed in monetary form and is determined by the consumer who agrees to buy a product or service at a certain price.

It should not be forgotten that an important element of the market, taken into account in commercial activities, will be the environment in which the process of buying and selling goods takes place. The environment can be: open or closed, competitive or regulated.

Open Market Environment -϶ᴛᴏ conditions that ensure the free entry of enterprises into the market and exit from it. In such an environment, there are practically no obstacles for the organization of commercial activities by enterprises in a certain product market (food, furniture, etc.) or in a certain territory.

Closed Market Environment is determined by various regulations, which create obstacles for the entry of new enterprises into the market: ϲᴏᴏᴛʙᴇᴛϲᴛʙenforcement laws: quota and licensing systems, customs barriers, etc. In almost all developed economies, there is a mechanism of state protectionism against domestic producers and commercial structures.

Competitive market environment implies the presence of many small and medium-sized enterprises-sellers and buyers, providing free choice of goods, as well as conditions for free competition. It is this market environment that makes it possible to equalize supply and demand, to form prices that are close to the cost of goods. By the way, this environment is the most favorable for commercial activities. Material published on http: // site

Controlled environment- ϶ᴛᴏ environment in which the state creates a rigid planning and distribution system, through which almost all aspects of the enterprise's activities are regulated. In the ϶ᴛᴏth environment, only the distribution and exchange function of commercial activity will remain, with the practical absence of commercial risk and commercial success. Buyers are competitors.

Types of demand by degree of satisfaction

When organizing commercial operations, various forms of demand manifestation are taken into account, which influence decisions on the purchase (sale) of goods.

By degree of satisfaction Distinguish: real demand, satisfied and unsatisfied.

Real demand represents the size of the actual sale of goods for a certain period, expressed in natural or cost indicators. It is worth noting that it is determined by the amount of money allocated for the purchase of goods at a certain price level for them.

Satisfied (or realized) demand constitutes the bulk of the solvent need. It is worth noting that it is less than real demand by the amount of unsatisfied demand for the product.

Unsatisfied demand -϶ᴛᴏ the demand for goods, which was not satisfied for any reason: lack of sale, low quality, high price, etc.

Unsatisfied demand can be:

explicit - when the buyer, having certain financial capabilities, cannot purchase the goods he needs for various reasons;
hidden - will stay when buying a product or service, which will not be full-fledged substitutes for the missing product or service or are not at all connected with it by a relationship of reciprocity and substitution;
deferred - postponed for a while for various reasons demand. For example, the need to accumulate a certain amount of money for the purchase of specific goods, the obligatory purchase of goods for a specific event, etc.

According to the frequency of occurrence, consider:

everyday demand - will be expected almost daily (food, soap);
periodic - will be at certain intervals (shoes, clothes);
episodic - will happen occasionally, "from time to time" (jewelry, delicacies)

Excluding the above, there are:

emerging demand- ϶ᴛᴏ demand for new and little-known goods and services, which develops as buyers study the consumer properties of goods, their quality, packaging, etc., as well as under the influence of measures taken by manufacturers and intermediaries to promote these goods.

Potential demand- the potential volume of demand of buyers of a given trading enterprise for all goods, certain groups of goods or for a certain brand of goods. It is worth noting that it demonstrates the ability of consumers to send a certain amount of money to purchase goods and services.

Aggregate demand -϶ᴛᴏ is the real volume of goods that consumers, businesses, and the government are willing to purchase at a given price level. Aggregate demand can be equated to market capacity.

Types of demand depending on the intentions of buyers

Given the dependence on the intentions of buyers, there are:

demand is stable (conservative, firmly formulated, rigid) - premeditated demand will be for a certain product and does not allow its replacement by any other, even homogeneous product. It is usually installed on everyday goods that are constantly reproduced in the same quantities and assortment (for bread, milk, etc.);
alternative (unstable, soft, compromise) demand is formed finally in the store in the process of direct acquaintance of buyers with the product and its features. Alternative demand allows for the interchangeability of goods within a product group or subgroup (confectionery, shoes);
impulse (spontaneous) demand- will be presented by buyers without prior consideration, arises directly at the points of sale under the influence of advertising, display of goods or offers of the seller. Most often, ϶ᴛᴏ demand for little-known or new goods.

At negative demand most buyers in this market reject the product regardless of its quality (kerosene for lamps, some stationery, etc.)

At irregular demand sales fluctuate on a seasonal, daily and even hourly basis (demand for umbrellas, medicines, etc.)

Demand increased exceeds the capacity of production and imports to his satisfaction.

Types of demand depending on the influence of price

depending from price influence distinguish:

demand is elastic tends to change with a change in the price of a product or the income of the population (demand for cars, electrical household goods, etc.);
demand is inelastic tends to remain unchanged regardless of changes in the income of the population and the price of goods (demand for goods that ensure human life - consumer basket goods)

These basic forms of demand individually or in combination shape the market conditions.

Market conditions - the ratio of supply and demand in the market of goods and services. It is necessary to take into account the socio-psychological aspects of the manifestation of demand and, in ϲᴏᴏᴛʙᴇᴛϲᴛʙii, make the final decision on the purchase and forms of sale of goods.

Law of demand states that, ceteris paribus, the demand for goods in quantitative terms varies inversely with price. The law of demand does not work in three cases:

with the rush demand caused by the expected increase in prices;
for some rare and expensive goods, which are bought as a means of investing money;
when switching demand to better and more expensive goods.

Demand factors

Demand is formed under the influence of many factors, which can be combined into the following groups:

economic forces, the level of development of the production of goods, the monetary income of the population, the level of retail prices and their ratio, the degree of achieved provision of goods;
social factors: the social culture of society, the professional composition of the population, the level of development of culture, etc.;
demographic factors population size, ratio between urban and rural population, age and sex composition, family size and composition, population migration;
natural and climatic factors, geographical and climatic conditions, traditions, living conditions, etc.;
political factors, unforeseen emergencies.

Non-price factors also influence the change in demand:

change in the monetary income of the population;
change in prices for substitute goods;
government economic policy;
changing consumer preferences.

Along with demand, an important element of the market will be the supply of goods. It is worth saying that for commercial operations, ϶ᴛᴏ is the most significant factor that determines the saturation of the market, its structural shifts, etc.

offer called the amount of goods or services that producers are willing to sell at a certain price for a certain period.

The offer includes two elements:

the manufacturer's readiness to alienate this product or service;
set of conditions under which the seller is ready to sell the goods.

Law of supply states that supply, other things being equal, changes in direct proportion to changes in price. The offer may change not only under the influence of price factors, but also due to other reasons:

changes in production costs as a result of technical innovations;
changes in sources of resources, tax policy, cost of production factors;
new manufacturers or importers entering the market, increasing supply regardless of prices;
actions of natural and political factors, etc.

The interaction of supply and demand in market conditions forms the price.

Market price - the result of the interaction of supply and demand.

Laws of market pricing:

the price tends to such a level at which demand is equal to supply;
When demand increases and supply stays the same, the price will increase and vice versa.

At the level of coincidence of supply and demand, the price ϲᴏᴏᴛʙᴇᴛϲᴛʙ values value, socially necessary costs.

Price there is a balance of interests of buyers and sellers, i.e. balance of marginal utility (price and demand) and production costs (price and supply)

The equilibrium of prices in a market economy is designed to perform three functions:

Function exceptions(sanitizing), i.e. sellers are forced out of the market, the prices (costs) for their goods exceed the cost of production.
Function alignment, those. through the price, the interests of the seller and the buyer are aligned, and the price approaches the cost of the goods (the market price will be a measure of the scarcity of the goods)
The control function, i.e. through price, the market forces out goods that do not meet the requirements of buyers in terms of cost, quality and other parameters.

The formation of prices with their approach to the cost is possible in conditions of pure (perfect) market competition, when there are at least 6-8 free sellers on the market, ensuring the saturation of the market and competing with each other. In this situation, the role of the state in price regulation is negligible. In conditions of monopoly and oligopoly, the state through the antimonopoly mechanism influences the price setting of monopolies. Usually ϶ᴛᴏ or strict price regulation, or indirect - through an increase in taxes and other measures of influence.

Demand, supply and price are interdependent and are taken into account in commercial activities as a whole.

The degree of change in supply and demand under the influence of one or another factor characterizes their elasticity. Elasticity will be a quantitative measure of the interaction of these elements of market relations.

Elasticity - measure of the response of one quantity to a change in another. It is worth noting that it shows how many percent one variable changes when the other changes by 1%.

Ep = Percent change in quantity demanded (Q) / Percent change in price (P)

Yer - price elasticity coefficient;
Q- the quantity of goods for which demand is presented;
R- the market price of the product.

Elastic demand - the coefficient is greater than one, i.e. quantity demanded changes by a greater percentage than price or income.

Inelastic demand - elasticity coefficient is less than unity.

Demand with unit elasticity price and quantity demanded change by the same percentage.

Elasticity is quite constant over time and can be used to determine the strategy for purchasing and selling products. Excluding the above, with the help of the ϶ᴛᴏth indicator, the government develops tax policy (the correct use of indirect taxes increases tax revenues to the budget) and methods of state regulation of the market.

To develop a strategy for commercial activity, such an indicator as the elasticity of supply is of great importance.

Supply elasticity shows how the production and supply of a particular product reacts to price changes:

E = Percent Change S / Percent Change P

E - supply elasticity coefficient;
S- offer;
R- price.

When determining the volume of purchases (sales) of products, the interchangeability (complementarity) of goods is important.

Substitute goods (substitutes) - such pairs of goods, an increase in the price of one of them leads to an increase in demand for the other.

Complementary goods (sets)- such pairs of goods, an increase in the price of one of them leads to a decrease in demand for the other (an increase in car prices leads to a decrease in demand for fuels and lubricants)

If the coefficient of elasticity is greater than one, then the product is interchangeable, if it is less, it is complementary.

When an excess amount of money is in circulation, the ratio of supply and demand also changes. The relationship between the elements of the market mechanism is shown in fig. 6.1. The thin arrows show direct dependence between changes in the value of market elements, and thicker lines - reverse addiction.

The laws of supply and demand are related to the amount of money in circulation.

Figure No. 6.1. Relationship between market elements

Given the dependence on the type of demand, various methods of studying it are used:

realized demand is studied by the operational method (the code is read), the balance method;
unsatisfied demand - registration of sheets of unsatisfied demand, registration of the facts of the absence of goods, taking into account the number of days when the goods were absent, registration of orders, analysis of customer complaints.

The emerging demand is studied at exhibitions, fairs, tastings, by the survey method.

Demand is one of the most important concepts in the economy in general and in marketing in particular. It is demand that determines whether a product will be purchased, and if so, how often?

Demand is the need of the consumer, which he presents to the market. However, for a buying need to become a demand, the buyer must be able to pay for his want. That is, demand can be characterized as the desire and ability of the consumer to purchase a product at a certain time and in a certain place.

Demand is made up of many smaller elements, each of which has its own characteristics, which have arisen under the influence of economic, political, social, demographic and other factors. It is for this reason that there are a huge number of classifications of demand (by market size, by form of education, by trends, and so on). We will consider the classification of demand, which is used to solve various marketing problems.

In marketing, demand is divided into eight types:

Negative
Missing
Hidden
Falling
Irregular
Complete
Excessive
Irrational

Each of these types has its own characteristics and features and dictates certain marketing behavior for the company.

Negative demand- it occurs when the bulk of consumers have no desire to purchase a product, but has every opportunity to do so. Consumers may even incur some losses (both direct and indirect), but still tend to avoid buying.

For example, it may be a refusal to purchase goods from a certain country if there is a political conflict with it. Negative demand can be observed in a separate group of consumers, for example, in the group of vegans, products made from natural fur and leather will be in negative demand.

For this case, the conversion type of marketing is used. The specialist must analyze the reasons for the rejection of the product, as well as find opportunities for correcting the situation (for example, improving the quality of the final product, reducing the price, active promotion).

Missing. Buyers are not interested in purchasing products, they are indifferent to them.
With this type of demand, buyers simply do not show interest in the product. There are many reasons for this buying behavior. For example, small businesses are not interested in buying the most powerful equipment, since their needs are much smaller and allow them to manage with less powerful, but cheaper analogues, and vice versa, a large agro-industrial complex is not interested in buying household walk-behind tractors, as it needs more productive equipment.
In this demand, promotional marketing is applied. The main task is to determine the needs of the consumer and offer him the appropriate product.
Hidden. Paying consumers have a desire, but no opportunity to purchase the product or service they are interested in.
In this case, the goods existing on the market may not satisfy the consumer for any reason. Often the cause of latent demand is a shortage in the market for goods and services. For example, neo-paganism, which recently came into fashion, generated a demand for various natural goods (wooden utensils, herbal preparations, beekeeping products), the demand for which was not satisfied for some time, however, this niche was filled over time.
In this case, developmental marketing is applicable, in which hidden needs are identified and appropriate offers for consumers are created.
Falling. Falling demand is characterized by a steady downward trend in the number of products sold. Every entrepreneur faces this type of demand sooner or later.
In case of falling demand, remarketing is an effective tool. It allows you to update the offer, making it more interesting and modern.
Irregular. Very many goods have seasonal fluctuations in demand, which can be very, very significant. Few people buy New Year's toys in May. Synchromarketing helps to smooth out such fluctuations by introducing new offers, flexible prices, promotions, etc. For example, travel agencies offer travel on interesting terms in unpopular months.
Full. This kind of demand perfectly matches the supply. The product fully meets the expectations of buyers. In this case, only supportive marketing is required, which does not allow competitors to win back market share. As well as marketing tools in this case are used to quickly respond to changes in the market and consumer behavior.
Excessive. Demand exceeds supply and cannot be met. In this case, demarketing is carried out to reduce the hype. To reduce the level of demand (temporarily or permanently) raise prices and reduce incentives.
Irrational. The desire of consumers to purchase a product that can harm health, the environment, etc. In this case, counter-marketing is used to reduce demand. An example of such opposition is the fight against drugs.

1 type of demand.

negative demand.

The market does not like the product. And here the task of marketing is to analyze why the market dislikes this product and whether the use of marketing tools can change the negative attitudes of the market by changing the consumer properties of the product, reducing the price of the product and becoming more active.

2 type of demand .

Lack of demand. In this case, consumers are not interested in our product or are completely indifferent to it. The task of marketing in this case is to find ways to translate the consumer properties of the product into benefits for a particular consumer.

3 type of demand .

Hidden Demand . Many consumers experience needs that are impossiblesatisfy with products available on the marketand services. There is a great hidden demand for organic food, safe medicines, or at least those with minimal side effects. Taskmarketing in this case is to assess the size of the potential market and create effective goods and services that can meet demand (organic vegetables and products, medicines with a minimum of side effects.)

4 type of demand .

Falling demand. Over time, the demand for the product decreases. The task of marketing in this case is to reverse the trend of falling demand through a creative rethinking of the approach to offering a product or changing any consumer properties of the product.

5 type of demand.

Irregular demand . For many pharmacy products (drugs)Sales fluctuate on a seasonal, daily and even hourly basis, which causes problems of underloading and overloading. Seasonal diseases (influenza-winter, autumn) - a seasonal product. Transport - overload during peak hours, etc.

6 type of demand.

Complete demand. Businesses meet their demand. The task of marketing is to maintain the existing level of demand (to take care of the quality of goods, service, etc.).

7 type of demand.

Excessive demand. The level of demand is much higher than the organization can meet. The task of marketing in this case is demarketing - to look for ways to temporarily or permanently reducedemand (raise prices, reduce service).Necessarydo not eliminate at this stagedemand and reduce it.

8 type of demand.

Irrational demand. Countering the demand for products that are unhealthy requirestargeted efforts. A campaign is being carried out against the distribution of cigarettes, alcoholic beverages, narcotic drugs, firearms, and porn films. The goal of marketing in this case is to convince people to give up their bad habits by spreading fearsome information, drastically raising prices and limiting the availability of goods.

Today, almost any developed country in the world is characterized by a market economy, in which state intervention is minimal or completely absent. Prices for goods, their assortment, volumes of production and sales - all this is formed spontaneously as a result of the work of market mechanisms, the most important of which are law of supply and demand. Therefore, let us consider at least briefly the basic concepts of economic theory in this area: supply and demand, their elasticity, the demand curve and the supply curve, as well as the factors that determine them, market equilibrium.

Demand: concept, function, graph

Very often one hears (sees) that such concepts as demand and the magnitude of demand are confused, considering them synonyms. This is wrong - demand and its value (volume) are completely different concepts! Let's consider them.

Demand (English Demand) - the solvent need of buyers for a certain product at a certain price level for it.

Demand quantity(volume demanded) - the quantity of goods that buyers are willing and able to purchase at a given price.

So, demand is the need of buyers for a certain product, provided by their solvency (that is, they have money to satisfy their need). And the magnitude of demand is the specific amount of goods that buyers want and can (they have the money to buy) to buy.

Example: Dasha wants apples and she has money to buy them - this is a demand. Dasha goes to the store and buys 3 apples, because she wants to buy exactly 3 apples and she has enough money for this purchase - this is the amount (volume) of demand.

There are the following types of demand:

individual demand- an individual specific buyer;
total (aggregate) demand- all buyers available on the market.

Demand, the relationship between its value and price (as well as other factors) can be expressed mathematically, as a function of demand and a demand curve (graphical interpretation).

Demand function- the law of dependence of the magnitude of demand on various factors influencing it.

- a graphical expression of the dependence of the quantity demanded for a certain product on the price of it.

In the simplest case, the demand function is the dependence of its value on one price factor:

P is the price of this product.

The graphic expression of this function (the demand curve) is a straight line with a negative slope. Describes such a demand curve the usual linear equation:

where: Q D - the amount of demand for this product;
P is the price for this product;
a is the coefficient that specifies the offset of the beginning of the line along the abscissa axis (X);
b – coefficient specifying the line slope angle (negative number).

The line graph of demand expresses the inverse relationship between the price of a good (P) and the number of purchases of this good (Q)

But, in reality, of course, everything is much more complicated and the amount of demand is affected not only by the price, but also by many non-price factors. In this case, the demand function takes the following form:

where: Q D - the amount of demand for this product;
P X is the price for this product;
P is the price of other related goods (substitutes, complements);
I - income of buyers;
E - expectations of buyers regarding price increases in the future;
N is the number of possible buyers in the given region;
T - tastes and preferences of buyers (habits, following fashion, traditions, etc.);
and other factors.

Graphically, such a demand curve can be represented as an arc, but this is again a simplification - in reality, the demand curve can have any of the most bizarre shapes.

In reality, demand depends on many factors and the dependence of its magnitude on price is non-linear.

Thus, factors affecting demand:
1. Price factor of demand- the price of this product;
2. Non-price factors of demand:

the presence of interrelated goods (substitutes, complements);
income level of buyers (their solvency);
the number of buyers in a given region;
tastes and preferences of buyers;
customer expectations (regarding price increases, future needs, etc.);
other factors.

Law of demand

To understand market mechanisms, it is very important to know the basic laws of the market, which include the law of supply and demand.

Law of demand- when the price of a product rises, the demand for it decreases, with other factors unchanged, and vice versa.

Mathematically, the law of demand means that there is an inverse relationship between the quantity demanded and the price.

From a philistine point of view, the law of demand is completely logical - the lower the price of a product, the more attractive its purchase and the more units of the product will be bought. But, oddly enough, there are paradoxical situations in which the law of demand fails and acts in the opposite direction. This is manifested in the fact that the quantity demanded increases as the price rises! Examples are the Veblen effect or Giffen goods.

The law of demand has theoretical background. It is based on the following mechanisms:
1. Income effect- the desire of the buyer to purchase more of this product at a lower price for it, while not reducing the volume of consumption of other goods.
2. Substitution effect- the willingness of the buyer to reduce the price of this product to give preference to him, abandoning other more expensive products.
3. Law of diminishing marginal utility- as the product is consumed, each additional unit of it will bring less and less satisfaction (the product "gets bored"). Therefore, the consumer will be ready to continue buying this product only if its price decreases.

Thus, a change in price (price factor) leads to change in demand. Graphically, this is expressed as a movement along the demand curve.

Change in the magnitude of demand on the chart: moving along the demand line from D to D1 - an increase in the volume of demand; from D to D2 - decrease in demand

The impact of other (non-price) factors leads to a shift in the demand curve - change in demand. With an increase in demand, the graph shifts to the right and up; with a decrease in demand, it shifts to the left and down. Growth is called expansion of demand, decrease - contraction of demand.

Change in demand on the chart: shift of the demand line from D to D1 - demand narrowing; from D to D2 - expansion of demand

Elasticity of demand

When the price of a good increases, the demand for it decreases. When the price goes down, it goes up. But this happens in different ways: in some cases, a slight fluctuation in the price level can cause a sharp increase (decrease) in demand, in others, a change in price over a very wide range will have practically no effect on demand. The degree of such dependence, the sensitivity of the quantity demanded to changes in price or other factors is called the elasticity of demand.

Elasticity of demand- the degree of change in the quantity demanded when the price (or other factor) changes in response to a change in price or other factor.

A numerical indicator reflecting the degree of such a change - elasticity of demand.

Respectively, price elasticity of demand shows how much the quantity demanded will change when the price changes by 1%.

Arc price elasticity of demand- used when you need to calculate the approximate elasticity of demand between two points on the arc demand curve. The more convex the demand curve is, the higher the elasticity error will be.

where: E P D - price elasticity of demand;
P 1 - the initial price of the goods;
Q 1 - the initial value of demand for goods;
P 2 - new price;
Q 2 - the new value of demand;
ΔP – price increment;
ΔQ is the increment in demand;
P cf. – average price;
Q cf. is the average demand.

Point elasticity of demand with respect to price- is applied when the demand function is given and there are values of the initial quantity of demand and the price level. It characterizes the relative change in the quantity demanded with an infinitesimal change in price.

where: dQ is the demand differential;
dP – price differential;
P 1 , Q 1 - the value of the price and the magnitude of demand at the analyzed point.

Elasticity of demand can be calculated not only in terms of price, but also in terms of income of buyers, as well as other factors. There is also a cross elasticity of demand. But we will not consider this topic so deeply here, a separate article will be devoted to it.

Depending on the absolute value of the elasticity coefficient, the following types of demand are distinguished ( types of elasticity of demand):

Perfectly inelastic demand or absolute inelasticity (|E| = 0). When the price changes, the quantity demanded practically does not change. Close examples are essential goods (bread, salt, medicines). But in reality there are no goods with a perfectly inelastic demand for them;
Inelastic demand (0 < |E| < 1). Величина спроса меняется в меньшей степени, чем цена. Примеры: товары повседневного спроса; товары, не имеющие аналогов.
Demand with unit elasticity or unit elasticity (|E| = -1). Changes in price and quantity demanded are fully proportional. The quantity demanded rises (falls) at exactly the same rate as the price.
elastic demand (1 < |E| < ∞). Величина спроса изменяется в большей степени, чем цена. Примеры: товары, имеющие аналоги; предметы роскоши.
Perfectly elastic demand or absolute elasticity (|E| = ∞). A slight change in price immediately raises (lowers) the quantity demanded by an unlimited amount. In reality, there is no product with absolute elasticity. A more or less close example: liquid financial instruments traded on the exchange (for example, currency pairs on Forex), when a small price fluctuation can cause a sharp increase or decrease in demand.

Suggestion: concept, function, graph

Now let's talk about another market phenomenon, without which demand is impossible, its inseparable companion and opposing force - supply. Here one should also distinguish between the offer itself and its size (volume).

Offer (English "Supply") - the ability and willingness of sellers to sell goods at a given price.

Offer amount(volume of supply) - the quantity of goods that sellers are willing and able to sell at a given price.

There are the following offer types:

individual offer– a specific individual seller;
total (cumulative) supply– all sellers present on the market.

Offer function- the law of the dependence of the magnitude of the proposal on various factors influencing it.

- a graphical expression of the dependence of the supply of a certain product on the price of it.

Simplified, the supply function is the dependence of its value on the price (price factor):

P is the price of this product.

The supply curve in this case is a straight line with a positive slope. The following linear equation describes this supply curve:

where: Q S - the value of the proposal for this product;
P is the price for this product;
c is the coefficient that specifies the offset of the beginning of the line along the abscissa axis (X);
d is the coefficient specifying the line slope angle.

The supply line graph expresses a direct relationship between the price of a product (P) and the number of purchases of this product (Q)

The supply function, in its more complex form, which takes into account the influence of non-price factors, is presented below:

where Q S is the value of the offer;
P X is the price of this product;
P 1 ...P n - prices of other related goods (substitutes, complements);
R is the presence and nature of production resources;
K - applied technologies;
C - taxes and subsidies;
X - natural and climatic conditions;
and other factors.

In this case, the supply curve will be in the form of an arc (although this is again a simplification).

In real conditions, supply depends on many factors, and the dependence of supply volume on price is non-linear.

Thus, supply factors:
1. Price factor- the price of this product;
2. Non-price factors:

availability of complementary and substitute goods;
level of technology development;
the quantity and availability of the necessary resources;
natural conditions;
expectations of sellers (manufacturers): social, political, inflationary;
taxes and subsidies;
market type and its capacity;
other factors.

Law of supply

Law of supply- when the price of a product rises, the supply for it increases, other factors remaining unchanged, and vice versa.

Mathematically, the law of supply means that there is a direct relationship between supply and price.

The law of supply, like the law of demand, is very logical. Naturally, any seller (manufacturer) seeks to sell their product at a higher price. If the price level in the market rises, it is profitable for sellers to sell more; if it falls, it is not.

A change in the price of a commodity leads to change in supply. On the graph, this is shown as a movement along the supply curve.

Change in supply on the chart: moving along the supply line from S to S1 - an increase in supply; from S to S2 - decrease in supply

A change in non-price factors leads to a shift in the supply curve ( change the proposal itself). Offer expansion- shift of the supply curve to the right and down. Supply narrowing- shift to the left and up.

Supply change on the chart: supply line shift from S to S1 - supply narrowing; from S to S2 - sentence expansion

Supply elasticity

Supply, like demand, can be in varying degrees depending on price changes and other factors. In this case, we talk about the elasticity of supply.

Supply elasticity- the degree of change in the supply quantity (the number of goods offered) in response to a change in price or other factor.

A numerical indicator reflecting the degree of such a change - supply elasticity coefficient.

Respectively, price elasticity of supply shows how much the supply will change when the price changes by 1%.

The formulas for calculating the arc and point elasticity of supply at a price (Eps) are completely similar to the formulas for demand.

Types of supply elasticity by price:

perfectly inelastic supply(|E|=0). A change in price does not affect the quantity supplied at all. This is possible in the short term;
inelastic supply (0 < |E| < 1). Величина предложения изменяется в меньшей степени, чем цена. Присуще краткосрочному периоду;
unit elasticity supply(|E| = 1);
elastic supply (1 < |E| < ∞). Величина предложения изменяется в большей степени, чем соответствующее изменение цены. Характерно для долгосрочного периода;
perfectly elastic offer(|E| = ∞). The quantity supplied changes indefinitely for a slightly small change in price. Also typical for the long term.

Remarkably, situations with perfectly elastic and perfectly inelastic supply are quite real (unlike similar types of elasticity of demand) and are encountered in practice.

Demand and supply "meeting" in the market interact with each other. With free market relations without strict state regulation, they will sooner or later balance each other (this was already mentioned by the French economist of the 18th century). This state is called market equilibrium.

A market situation where demand equals supply.

Graphically, the market equilibrium is expressed market equilibrium point- the point of intersection of the demand curve and the supply curve.

If supply and demand do not change, the market equilibrium point tends to stay the same.

The price corresponding to the market equilibrium point is called equilibrium price, quantity of goods - equilibrium volume.

Market equilibrium is graphically expressed by the intersection of demand (D) and supply (S) graphs at one point. This point of market equilibrium corresponds to: P E - equilibrium price, and Q E - equilibrium volume.

There are different theories and approaches explaining exactly how the market equilibrium is established. The most famous are the approach of L. Walras and A. Marshall. But this, as well as the cobweb-like model of equilibrium, the seller's market and the buyer's market, is a topic for a separate article.

If very short and simplified, then the mechanism of market equilibrium can be explained as follows. At the equilibrium point, everyone (both buyers and sellers) is happy. If one of the parties gains an advantage (the deviation of the market from the equilibrium point in one direction or another), the other party will be dissatisfied and the first party will have to make concessions.

For example: the price is higher than the equilibrium price. It is profitable for sellers to sell goods at a higher price and the supply rises, there is an excess of goods. And buyers will be dissatisfied with the increase in the price of goods. In addition, competition is high, supply is excessive, and sellers will have to lower the price in order to sell the product until it reaches the equilibrium value. At the same time, the volume of supply will also decrease to the equilibrium volume.

Or other example: the quantity of goods offered on the market is less than the equilibrium quantity. That is, there is a shortage of goods in the market. In such circumstances, buyers are willing to pay a higher price for the product than the one at which it is sold at the moment. This will encourage sellers to increase supply volumes while raising prices. As a result, the price and volume of supply/demand will come to an equilibrium value.

In fact, it was an illustration of the theories of market equilibrium by Walras and Marshall, but as already mentioned, we will consider them in more detail in another article.

Galyautdinov R.R.