1.2.1 Demand

• What is market mapping?

  A visual tool for analyzing market position
• How can a business achieve a competitive advantage?

  Through cost leadership, differentiation, and niche focus
• What does it mean to add value to a product?

  Enhancing a product's worth to customers
• What is product orientation?

  A focus on creating high-quality products
• How do product orientation and market orientation differ?

  Product orientation focuses on products, market orientation on customer needs
• What is demand?

  The quantity consumers are willing to purchase
• What does the law of demand state?

  As price decreases, demand increases
• What are substitute goods?

  Alternative products satisfying the same needs
• What happens when the price of substitute products decreases?

  Demand for the original product likely decreases
• What are complementary goods?

  Products used together with the original product
• What happens if the price of a complementary good rises?

  Demand for both goods likely falls
• How does consumer income affect demand?

  Higher income increases demand for normal goods
• What are normal goods?

  Goods whose demand rises with income
• What are inferior goods?

  Goods whose demand falls as income rises
• Give an example of how income changes demand.

  Luxury cars demand increases with rising income
• How do fashions, tastes, and preferences affect demand?

  Trends can increase or decrease product demand
• What can influence consumer preferences?

  Trends, cultural changes, and societal attitudes
• What is the impact of advertising on demand?

  It can create awareness and shape preferences
• How does brand loyalty affect demand?

  Strong brand loyalty increases demand for products
• How do demographics affect demand?

  Changes in population size and age affect demand
• What happens to demand with an aging population?

  Higher demand for healthcare services increases
• What are external shocks?

  Unexpected events altering market conditions
• How did COVID-19 affect demand in certain sectors?

  Travel demand plummeted, home services surged
• What is seasonality in demand?

  Fluctuations in demand based on the time of year
• What does the acronym PIRATES stand for in demand analysis?

  Population, Income, Regulation, Advertising, Tastes, External shocks, Substitutes
• What are the factors leading to a change in demand?

  • Changes in prices of substitutes and complementary goods
  • Changes in consumer income
  • Fashions, tastes, and preferences
  • Advertising and branding
  • Demographics
  • External shocks
  • Seasonality
• What is the relationship between price changes and demand curve shifts?

  • Price changes cause movement along the curve
  • Other factors (PIRATES) cause shifts in the curve
• What is an example of a product that was once fashionable but is no longer?

  • Examples may include:
  • Fidget spinners
  • Beanie Babies
  • Certain fashion trends
• What is the impact of a government campaign promoting eco-friendly products?

  • It can shift consumer preferences towards those products
  • Increases demand for eco-friendly alternatives