Law of Demand

A market and its factors

A market is an atmosphere in which goods and services are sold and bought at a publicly agreed-upon price. The market’s composition is determined by the various factors that emerge in it. Demand for a particular good or commodity is one such power. There are many meanings of demand, the most commonly known being the amount provided by a vendor that a buyer is able to buy. Customers’ wishes, expectations, and preferences drive demand, as these three factors support their readiness and capacity to buy a given product or service. Another key term in the concept of demand is the quantity demanded that refers to the magnitude of service or quantity of goods that the buyer population is willing to purchase for a given period and at a particular time. Several types of demands exist, for example, the demands for, perishable and durable goods, consumers’ and producer’s goods, superior and inferior goods and services, autonomous and derived demand, and necessary, comfort and luxury goods. Therefore, the law of demand is the inverse relationship that exists between the quantity of a commodity demanded per given time period and its price. This paper discusses four factors that are capable of the reduction or increment of the quantity of demand using the Samsung brand as the primary good of analysis.

Income of consumers

Samsung remains to be one of the leading electronic brands whose sales have risen to unimaginable levels over the past few decades. While this brand remains common among most individuals in different regions of the globe, Samsung has managed to outdo its competitors and focused on the provision of high-quality telecommunication devices that would suit consumers off all economic strengths. One key factor that influences the demand for Samsung phones and other market goods and services is the income of its consumers. The price of a product will hugely determine the types of its consumers and their willingness to purchase the good as pricing acts as a rationing system in a given market structure. Consumers always opt for the goods or services that fall within their reach. If the prices are far beyond the reach of the clients meaning that their incomes cannot sustain the pricing of a certain good, the sales of that particular product will be low. Consequently, the suppliers will provide fewer units of the item since the demand would have decreased. However, whenever the income of the consumers increases, the suppliers will provide more item units since there would be an increased demand for the product. Samsung, as a brand has successfully surveyed its market and noted the different patterns in consumer incomes. Consequently, this firm produces products that match the needs of consumers at different income levels.

Consumer preferences

Consumer preferences is another key factor influencing the pricing of a good thereby dictating the levels of its demand. Most economists use the term “taste” to describe the customers’ preferences for using or purchasing a given good. Various consumers prefer different goods and services over others. Therefore, the underlying foundation of the concept of demand is the model of consumer behavior. The determination of the individual user preferences might be outside the realm of economics, but the producers and suppliers of a given good must always ensure that the preferences of this vital market population are met. Different factors affect consumer preferences such as culture, individual tastes, and education. If an event occurs whereby the consumers all over sudden develop a greater liking or taste for a given product, the demand will substantially increase, and the producers will be prompted to create many similar products to cater for this demand trend. In the case of Samsung, several consumers across the globe have developed a taste for the latest mobile devices produced by this firm. This brand utilizes consumer preferences when coming up with new phone brands. For example, the rapid increase in the acquisition of the Samsung S7 Edge which is a relatively new version of S7 showed that the consumers had much preference for this product to its predecessors.

Number of consumers

The number of consumers is a key factor that determines the nature of a given market as well as its operations. All products and services are created with the consumers in mind, and the producers of these goods always strive to ensure that they create brand awareness with the aim of increasing the number of potential consumers of their products. The market demand curve is a perfect representation of the horizontal summation of the willingness of buyers in the market. Consequently, whenever the number of consumers rises, the demand for the product will substantially increase and vice versa. The concept of the number of consumers explains the different trends in the demand for Samsung handheld devices. In certain markets with many customers, the company has witnessed increased sales with its sales dwindling in other regions with fewer individuals.

Price of complementary and substitute goods

Lastly, the price of complementary and substitute goods also has a significance in shaping its demand patterns. Consumers around the globe are rational in making decisions when choosing a good over another. The tough economic times in different regions of the world demands that the consumers are skeptical in decision making. Consequently, these individuals tend to economize in the cost of their purchases. The price of a substitute will affect the demand in that when the substitute good is more expensive that this product the consumers will increase their demand for a product and when the manufacturers of the substitute product become tactical and decrease their pricing, customers will shift. Similarly, whenever the pricing of a good consumed alongside a given good increases, the demand for the original product will decrease. Whenever the prices of credit for making calls increase or the sim card prices go up, the demand for phones will substantially reduce. Unfortunately, the manufacturers and suppliers of phones have no control over the pricing of their complementary products.

Conclusion

In conclusion, different factors affect the demand for a given product in different markets. However, the consumers control the increase and decrease of demand. Manufacturers and suppliers strive to conduct a consumer analysis before venturing into new markets. This paper provides four primary factors that will dictate whether or not the demand for a given price increases or decreases. Most scholars have in the past had conflicting opinions on the aspects of demand and quantity supplied. The change in demand refers to the shift in a market’s total demand while the change in quantity refers to the variation in the amount of a certain good supplied to a given market. The distinguishing factor within these two concepts is the aspect of price. The change in demand keeps price constant while the change in quantity depends on the increase or decrease in the price of a commodity.