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    Demand and Pricing-L3

    Uploaded by

    Kyla Nicole Oarde
    This document discusses consumer demand and pricing theory. It explains that consumers make consumption decisions based on their wealth and aim to maximize satisfaction from goods and services over time. The theory of the consumer posits that consumers plan purchases and borrowing/saving to achieve optimal satisfaction given expected price changes. Price changes can affect consumer demand through substitution effects and income effects. Key determinants of demand include price, income, and product awareness. Models of consumer demand identify important demand factors and develop demand functions to forecast demand levels. Elasticity of demand measures sensitivity to determinant changes like price, and price discrimination involves charging different prices to different customers.

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    Demand and Pricing-L3

    Uploaded by

    Kyla Nicole Oarde
    13 views2 pages
    This document discusses consumer demand and pricing theory. It explains that consumers make consumption decisions based on their wealth and aim to maximize satisfaction from goods and services over time. The theory of the consumer posits that consumers plan purchases and borrowing/saving to achieve optimal satisfaction given expected price changes. Price changes can affect consumer demand through substitution effects and income effects. Key determinants of demand include price, income, and product awareness. Models of consumer demand identify important demand factors and develop demand functions to forecast demand levels. Elasticity of demand measures sensitivity to determinant changes like price, and price discrimination involves charging different prices to different customers.

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    DEMAND AND PRICING-L3

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    This document discusses consumer demand and pricing theory. It explains that consumers make consumption decisions based on their wealth and aim to maximize satisfaction from goods and services over time. The theory of the consumer posits that consumers plan purchases and borrowing/saving to achieve optimal satisfaction given expected price changes. Price changes can affect consumer demand through substitution effects and income effects. Key determinants of demand include price, income, and product awareness. Models of consumer demand identify important demand factors and develop demand functions to forecast demand levels. Elasticity of demand measures sensitivity to determinant changes like price, and price discrimination involves charging different prices to different customers.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    13 views2 pages

    Demand and Pricing-L3

    Uploaded by

    Kyla Nicole Oarde
    This document discusses consumer demand and pricing theory. It explains that consumers make consumption decisions based on their wealth and aim to maximize satisfaction from goods and services over time. The theory of the consumer posits that consumers plan purchases and borrowing/saving to achieve optimal satisfaction given expected price changes. Price changes can affect consumer demand through substitution effects and income effects. Key determinants of demand include price, income, and product awareness. Models of consumer demand identify important demand factors and develop demand functions to forecast demand levels. Elasticity of demand measures sensitivity to determinant changes like price, and price discrimination involves charging different prices to different customers.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    DEMAND AND PRICING-

    L3
     Marketing decisions
    - Decisions related to demand and pricing.
     Theory of Consumer
    - A consumer is someone who makes consumption decisions for herself or
    for her household unit. In modern society, consumption is largely
    facilitated by purchases of goods and services. Some of these goods and
    services are essential to a consumer’s livelihood, but others are
    discretionary, perhaps even a luxury.
    - Consumers are limited in how much they can consume by their wealth. A
    consumer’s wealth will change over time due to income and expenditures
    - Consumption decisions may be planned into the future, taking account of
    the expected changes in wealth over time. The theory of the consumer
    posits that a consumer plans her purchases, the timing of those
    purchases, and borrowing and saving so as to maximize the satisfaction
    she and her household unit will experience from the consumption of
    goods and services
     Consumer Theory
    - consumers are able to compare any two patterns of consumption,
    borrowing, and saving and deem that either one is preferred to the
    second or they are indifferent between the two patterns.
     Consumer- Pricing Theory
    - posits that a consumer plans her purchases, the timing of those
    purchases, and borrowing and saving so as to maximize the satisfaction
    she and her household unit will experience from consumption of goods
    and services.
    - Although consumers may anticipate changes in prices over time, they may
    find that their guesses about future prices are incorrect. When this
    happens, the theory states that they will adjust their consumption,
    borrowing, and saving to restore the optimality under the newly revealed
    prices
     Two effects of Price Changes
    - The substitution effect is based on an argument employing marginal
    reasoning like the marginal analysis
    - Utility-term for satisfaction
     Income Effect
    - The higher the income, the higher the cost of living.
     Determinants of Demand
     Price - it is the key determinant of demand in the theory of the
    consumer.
     Income - the resource of a human need.
     Product/Service-Awareness - Consumers must have knowledge of it.
     Modeling Consumer Demand
    - To develop a formal model of consumer demand, the first step is to
    identify the most important determinants of demand and define variables
    that measure those determinants
     Forecasting Demand
    - Identifying the key determinants of demand and developing demand
    functions gives a business manager a better understanding of his
    customers. A benefit of that understanding is improved accuracy in
    forecasting the demand levels for their products and services in an
    upcoming period.
     Elasticity of Demand
    - measures how sensitive demand is to changes in the level of one of the
    determinants. (e.g. price)
     Price Discrimination
    - Price discrimination is a selling strategy that charges customers different
    prices for the same product or service based on what the seller thinks
    they can get the customer to agree to

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