Consumer demand is Definition of concept, essence, forms and types

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:54

Economics is a rather complex science, which is simply teeming with unfamiliar and incomprehensible terms. This article will discuss what is consumer demand? This criterion is caused by the requirement of time. It is land, labor and capital that are of interest among buyers. Because of these factors, economic choice is formed, which must satisfy human needs in sufficient quantities.

Consumer demand is the amount of interest in commodities in a certain period of time. The higher the demand itself, the more goods and services of this category the society should produce.

Definition

Demand itself describes the behavior of actual and potential buyers of goods. It also indicates the need for goods, which is determined bythe purchase of any products and services that consumers could afford at certain prices and incomes. The level of interest is determined by the desire to acquire a specific or interchangeable product. Therefore, the demand can in no way coincide with the quantity of the goods actually purchased.

It is determined taking into account the following parameters:

inflation forecast;
total number of buyers;
price of alternative goods;
income;
personal preference;
the cost of the product or service itself.

Basic groups of needs (according to Maslow)

The scientist identifies 5 categories:

Physiological - housing, food, water, rest and sexual needs.
Interest in security, which implies protection from psychological and physical attacks from the outside world.
Social - a sense of social support, interaction and affection. The feeling that someone needs a person.
The need for respect and recognition by society.
The need for self-expression, where a person reaches his full potential and gradually moves to the top.

Thus, Maslow emphasized that the individual initially seeks to satisfy the need that is most important to him at a particular period of time.

Main consumer categories

They are determined on the basis of what degree of willingness to buy a product a particular buyer has. As a result, 5 categories of consumers were identified:

innovators;
those who adopt new products early;
first majority of consumers of a particular product;
late majority;
latecomers.

Innovators are 2.5% of all buyers (they are willing to take risks). 13.5% of people are those who follow trends and want to become recognized leaders (this is the second category). The third and fourth branches each include 34% of potential customers. Those who make a purchase last only 16%.

Budget constraints

Each consumer wants to buy only those goods that he can afford at a certain point in time, based on his current financial situation. Therefore, the buyer cannot purchase everything at once. In order for him to buy something specific, it is necessary that a number of economic factors coincide, and there are some fluctuations in the consumer demand market.

The main factor is the average level of income, since it determines the ability to purchase certain goods or services. That is, it determines the solvency of economic entities. The level of income completely influences the formation of demand.

Restrictions in the budget - a barrier that prevents the procedure of buying and selling. It arises from the instability of prices or incomes of citizens. That is, the subject of the economy is completely dependent on the availability of funds.

But in our world, you can borrow the necessary goods, that is, issueloan, and then return the money after a certain period. The downside is that after you need to pay interest.

Consumer basket

This term characterizes a category of goods that can be purchased for a certain amount of money, if prices are at the current level. Primary goods are included in the consumer basket. The needs of each economic entity are completely different, since everyone has different tastes, incomes and preferences.

The law of optimal consumption is applied to classify the consumer bundle. Pareto came up with this concept. He said that in the modern world, a person, choosing one good, must give up another. Thus, it is possible to determine what benefits are optimal for the rational existence of a particular person and people of the entire planet Earth.

What methods to stimulate consumer demand? It looks like this:

Developing your own brand;
optimization of the assortment of goods in retail outlets;
development of discounters;
maintaining an active market policy;
stimulate investment;
improving the competitiveness of domestic goods;
Supporting the solvency of customers through the provision of loans.

Market Shaping

Scientists distinguish 2 main types of hype - this is macro demand and micro demand. Each of them has its own characteristics.

Macro demand is the need for aggregated food and non-food products. This includes bakery products, clothes, shoes, and other categories. Also, consumer goods are determined by large segments of the population (urban, rural, and the whole country). That is, the territorial feature also plays an important role here.

Microdemand is the interest of a particular group of consumers in obtaining one specific product. The composition and nature of consumers determines the structure of consumer goods. Microdemand is divided into a number of distinct categories:

impulsive;
episodic;
periodic;
casual.

They also highlight the degree of satisfaction that happens:

unsatisfied;
realized;
potential.

Other categories:

degree of demand mobility;
buyers' intentions;
character of demand;
degree of intensity of demand;
business location.

Price has the most influence on the purchase of a product.

Increase in consumer demand production

In order to organize commercial activities, each enterprise of any form of ownership is obliged to study, analyze and predict the trend in the popularity of certain categories of different products. This will help to establish a balance between the structure of demand for goods and services, as well as between their supply in the market. The study of interest considerthe most important area of economic analysis for the enterprise.

Monitoring this data allows you to identify periods of increased change in consumer demand.

The main tasks that the company sets for evaluation:

production capabilities of the enterprise;
sales plan justification;
impact of demand on organizational performance;
factors affecting the increase or decrease in the popularity of a particular product;
season;
requirements for produced and sold products.

Types of consumer demand

To understand how this process develops, it is necessary to study all its types in as much detail as possible. Among them are:

Negative - consumers are eager to choose another brand because they are not interested in the proposed one.
Absent - the client has no interest in the proposed product.
Hidden - the user feels that the item is needed, but it will not be of practical use.
Falling - customers are no longer interested in this product due to certain factors.
Irregular - demand is constantly changing.
Full value - trade is at a consistently high level and fully meets the needs of the population.
Excessive - There is far less of a product on the market than consumers are willing to buy.
Irrational - harms the environment as well as human he alth.

Research methods

Research of the consumer goods market is carried out in order to reveal the behavior of buyers of a particular company. Thanks to him, long-term and long-term relationships are established with potential consumers. This is how the enterprise determines who is the main customer and who can occasionally make some acquisitions.

The results of the study provide an opportunity to understand how the firm can influence the final decision of the client.

Growth in consumer demand for food products is driven by crop yields, the time of year, and also depends on the personal preferences of each customer.

It is studied by two main parameters:

customer evaluation of product quality and design;
study of group assortment and total demand.

Tasks:

timely replenishment of various (optional color, design, packaging, taste, etc.) goods;
formation of unique goods at any enterprises.

Terminology

Retail turnover - characterizes the volume of sales of goods and services for household needs of personal or family use. Helps you figure out what customers prefer and what they don't.

Market segmentation - identifies groups of consumers who are satisfied with typical consumer needs.

The goal of marketing is to satisfy human needs.

Functional interest - part of the demand, due toconsumer properties.

Effect of joining the majority - here the consumer follows the generally accepted patterns, because he buys the product that others buy.

Snob effect - the client chooses those goods and services that are not typical for the majority.

The Veblen effect is a consumer demand that increases due to the popularity and “hype” of the brand.

Speculative effect - additional consumption is stimulated by the fact that prices may rise in the future, because customers are buying now in especially large quantities.

Determining the indicators of elasticity of demand - relative to the price of a product in a particular sales market, shows whether it is possible to achieve the desired level of sales by increasing the cost.

Consumer behavior is the process of creating demand for various goods and services. It depends on personal preferences, as well as the income of individuals. After the demand generation process, the customer defines his own consumer basket.