Demand Estimation Has Been At The Heart Of Many Studies

The relevance of demand and supply in economics cannot be overstated given that the two are considered some of economics' most fundamental concepts. In this text, I explain both the demand and supply for Anheuser-Busch's products. Further, I identify some of the substitute and/or complementary goods for Anheuser-Busch's products.

The demand for an item can depend on various factors as I mentioned earlier. There is a terminology that we use to describe the willingness of a buyer to spend a certain dollar amount on the demand of his choice. The price of a good has a correlation with the quantity that is being demanded. For example, if a Starbucks cup of coffee costs $2, 100 buyers will spend money on coffee every morning, but if the price of the coffee goes up to $4, then only 45 buyers will be willing to purchase that cup of coffee every morning. Not only can the price for the cup of coffee can go up, but it can also go down, another example would be if the price drops to $1, the demand for coffee will now come from 160 buyers versus the 100 buyers that were willing to pay $2 for their coffee; this would be classified as

Rivalry: The rivalry between Coca-Cola and Pepsi is extremely high; however, both companies continue to remain profitable. Prior to the 1980s, pricing wars negatively affected profitability for Coca-Cola and Pepsi. After Coca-Cola renegotiated its franchise bottling contract and both companies increased concentrate prices, the rivalry began to focus on differentiation and advertising strategies. Through creative advertising campaigns, such as the “Pepsi Challenge” where Pepsi ran blind taste tests to demonstrate that consumers

The current demand forecasting method is based on qualitative techniques more than quantitative ones. If the forecast is not accurate, the company would carry both inventory and stock out costs. It might lose customers due to shortage of supply or carry additional holding costs due to excess production. If the actual demand doesn’t match the forecast ones, and the forecast was too high, this will result in high inventories, obsolescence, asset disposals, and increased carrying costs. When a forecast is too low, the customer resorts to a competitive product or retailer. A supplier could lose both sales and shelf space at that retail location forever if their predictions continue to be inaccurate. The tolerance level of the average consumer

The first factor is the availability of substitute goods, which are goods that can be utilized instead of the original good. If there is a substitute good available, the demand is likely to change more because people can buy different products. On the contrary, if an item has few substitute goods, it may not gain or lose customers. In Canada, Nike shoes have lots of substitute goods like Adidas

The competition between Coke and Pepsi reached its peak to become a real war battle by the year 1980. This war had affected the industry profit for both concentrate producers and bottlers, while the effect of bottlers was much higher. After the successful “Pepsi Challenge” (blind taste tests: sales shot up) in 1974, Coke countered with rebates, retail price cuts and significant concentrate price increases. Pepsi followed of a 15% price increase of its own. During the early 1990’s bottlers of Coke and Pepsi employed low price strategies in the supermarket channel in order to compete with store brands. The concentrate producers were always able to increase their profits by increasing the concentrate price, while the bottlers, especially the

When analyzing a consumer’s demand for a product, one must consider the limitations such as income, budget, preferences, substitute products, and the price of products. External factors can also influence a hunter’s demand for a product, which will be discussed later.

Demand for the product is determined by many factors, like pricing, quality, advertising and distribution.

They also used functional format to determine quantity demanded. In class we discussed how this can determine changes in demand vs changes in quantity demand. We also stated that demand is a horizontal summation of individual demands. Which simply means many different demands form together to create one large demand trend line. Their equation is represented as: PGT = f(LN[QGT], POPULATIONT, GDPT, LN[T], MT). The variables included in this equation are the natural logarithm of lbs in the beef market, population, GDP, Logarithm of their time dummy variables, and logarithm of monthly dummy variables. In class we used simple variables such as income, tastes, price of subs, exports, etc. to find supply and demand for the product.

Normal products are categorized as products whose value is lower than prestigious products, they both assume a role in the market as they are targeted to different market segments. Demand curves differ as both products may be perceived differently, typically normal products are perceived as lower quality contrary to prestigious products whose customers perceive them as higher quality products. Ultimately, they differ in the perception of the customer as each product is categorized according to their price, and higher priced products may be perceived as better. An example could be represented by two different vehicle manufacturers; Honda, and BMW, Honda is a low priced vehicle known for reliability fuel efficiency, etc.… BMW are known for their luxury, and price. Here their demand may differ as they both have different target markets. Perhaps if Honda decided to raise their price, they would more than likely lose profit, but if BMW was to lower their price, their demand would potentially increase. These changes are known as demand shifts here a firm identifies the traits of each shift, and can identify the relationship in demand. Moreover, marketers can estimate their product demand. This is done by one;

1.Detail and discuss alt the challenges you faced in projecting demand: meeting customer needs and wants, pricing, competitive actions and competitive response. How did your decisions impact your end performance (market share, income statement)?

When only a few sellers offer a product with little regard to competition it is called an oligopoly. It is different from a monopoly because multiple corporations are involved, but the effects on the consumer are the same - bad. Although competition is usually in the best interest of the consumer, it is not always in the best interest of the corporation. If we examine the two leading soft drink producers, Coca-cola and Pepsi-cola, we see a prime example of an oligopoly (Zachary, 1999). As things are presently, each of these soft drink companies has about half of the soft drink market, and examined from a world-wide perspective that is a pretty large market. Either one of them, Coke or Pespi, could conceivably lower their prices in

The following graph demonstrate the demand curve of how many items of a product or service a consumer would like to purchase at different prices. Now by having the product at a lower price, the more a consumer is likely to buy. For that same reason it can be concluded that the price is one major factor of the product demand.

In economics, we need to use terms a little more carefully than they are sometimes used in ordinary discussions. In general use, "Demand" is a word that can have more than one meaning, but in microeconomics we define it more carefully so that it has only one meaning. Here is the definition:

In general, most of industry produces a huge number of products that are similar but not identical. Amongst all varieties, a few are produced, and consumers usually buy a fraction of all the varieties of products available. This observation shows that companies are likely to produce a large variety of same goods. This variety is source of power of market and also of profit. Without differentiation, homogeneity of the product will limit companies to the quantity (Cournot) and price (Bertrand) only.