The Theory of Supply and Demand
Basically, the economics of the
business simply means the relationship between supply and demands, how much is
our supply and are we getting the expected demand from the consumers or not. In
this theory, there are some factors that we need to take into consideration
before releasing our product to the market. These factors are as mentioned
below.
Price of the Commodity (Product)
Generally,
it is expected to have increase in demand when the price of product decreases,
which is why we set a product pricing strategy, which put on a limit on our
product’s price, this cannot exceed the limit. We are earning our profit by
selling in huge numbers.
Price of the Related Commodities or Products
Here
is where our competitors enter the market. Able Group in order to minimize the
risk of substitution by other competitors, decided to set our prices as low as
possible, which is why we running our enterprise on cost efficiency basses. Our
main competitor is Ikea, which is already having a strong brand image and
offering all range of study tables different in size and pricing.
Income of Consumers
The
most important factor is the income of our consumers. Since our targeted market
mostly is students who are not independent yet and mostly are on budget; hence
our product should be looking convenient enough to make them spend on it.
Taste and Preferences of Consumers
A
change in taste and preferences affects the level of demand for various goods.
Consumer's preferences may change because of changes in fashion, habits, and so
on. To overcome this issue, we are offering customization and custom made
product to our consumers. Therefore, for those who are having a particular
taste, they can place an order a month earlier with their specific preferences.
For the information, the customization will be done at no extra charges.
Expectation about future prices
Currently
our prices are fixed and no further discount is applicable to it since we are
even selling them below the market average prices. However, by having a
contract and permanent supplier, we can supply our raw materials at a cheaper
price; thus there is possibility of further reduction in our product prices in
the future. On the other hand, we are not making any announcement about it,
because if our consumers expect to receive more discounts in near future, it
can affect the demand negatively at the present situation.
