1.2.1 Demand

What is demand?

The amount of a good that consumers are willing and able to buy at a given price

What factors determine demand?

Seasonality

Trends

External shocks

Price of product

Changes in consumer income

Advertising and branding

Price of substitutes

Price of compliments

Demographics

What is a complementary product?

A product that needs to be used with another product

What are things to remember about changes to consumer income and demographics affecting demand?

Some products’ demand rises and some falls and the UK population is getting older

What are the two demand risk situations?

Overtrading and undiversified demand

What is overtrading?

When a business expands too quickly without sufficient resources like working capital

What is undiversified demand?

When a business relies heavily on a single product, customer segment or market