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Chapter 2: The Consumer
BMI3C
Mr. Whiler
Company
LOGO
2.1 Consumer Demand
 Read “The Pet Hotel” page 36-37
 discuss




How did she tailor her business to meet
customer needs?
Why is word of mouth effective in this instance?
How does her promotions spending relate to
supply and demand?
What important considerations were noted in her
business plan?
2.1 Consumer Demand
 Consumer

a person who uses a product
 Customer


someone who buys a product
they may not be the same person
 children are consumers but not customers
 sometimes a gatekeeper makes decisions

marketers need to understand who they are
marketing to...
2.1 Consumer Demand
 Needs


REMINDER!!!
something you require to live
food, protection, water, affiliation, etc.
 Wants



things beyond what is needed to survive
gourmet meals, iPads, hockey sticks
while you might want a fancy meal, a simpler
meal will keep you alive
2.1 Consumer Demand
 consumer demand is important to
understand


example: it is useless to market luxuries to
people without food
values change quickly
 technology changes the value of objects
 new trends
 social pressures
 changes in life
 cost
BASIC
ECONOMICS
Markets
 Doesn’t have to be a physical location
 They exist only when consumers / producers
come together to exchange goods / services for
money
 So a market could be a store where you buy
jeans or eBay
Markets contd.
2 major types of markets
1) consumer market “B2C”
 Made up of all the things we use for personal
consumption
2)business to business market “B2B”
- made up of all the companies which sell things to other
businesses
Have you ever
wondered
what determines
the prices
of the things you buy?
It comes down to
supply vs. demand
Demand
 Represents the consumer side of the
market
 How much of particular good/service do
consumers want
 3 things determine the level of demand
 Desire , Ability to pay , Willingness to pay
Supply
 Represents the manufacturer side of
the market
 How much of a particular good/service
can the manufacturer provide/is willing
to provide
The battle between
supply and demand
supply demand
Demand for tootsie pops in Rustonia
100
80
Point
Price
Market demand
A
B
20
40
700
500
Price
60
B
40
A
20
Demand
0
0
100
200
300
400
Quantity
500
600
700
800
Demand for tootsie pops in Rustonia
100
80
Point
Price
Market demand
A
B
C
20
40
60
700
500
350
C
Price
60
B
40
A
20
Demand
0
0
100
200
300
400
Quantity
500
600
700
800
Demand for tootsie pops in Rustonia
100
Point
Price
A
B
C
D
20
40
60
80
Market demand
D
80
C
Price
60
700
500
350
200
B
40
A
Demand
20
0
0
100
200
300
400
Quantity
500
600
700
800
So what do we notice about the
Demand CURVE
 As the price of a good decreases
demand for the good will increase
Supply for tootsie pops in Rustonia
100
Supply
80
Price
60
40
Point
Price
Supply
A
20
100
A
20
0
0
100
200
300
400
Quantity
500
600
700
800
Supply for tootsie pops in Rustonia
100
Supply
80
Price
60
B
40
Point
Price
Supply
A
B
20
40
100
200
A
20
0
0
100
200
300
400
Quantity
500
600
700
800
Supply for tootsie pops in Rustonia
100
Supply
80
C
Price
60
B
40
Point
Price
Supply
A
B
C
20
40
60
100
200
350
A
20
0
0
100
200
300
400
Quantity
500
600
700
800
Supply for tootsie pops in Rustonia
100
Supply
D
80
C
Price
60
B
40
Point
Price
Supply
A
B
C
D
20
40
60
80
100
200
350
530
A
20
0
0
100
200
300
400
Quantity
500
600
700
800
So What do we notice about
THE SUPPLY CURVE
• As the price of a good increases supply of
the good will increase
But how does all of
this determine the
price of goods?
It’s something called
Equilibrium
 The market is said to be in
equilibrium when supply equals
demand
Combining the supply and demand
curve
for
tootsie
pops
in
Rustonia
Supply
100
Price
80
Market is in equilibrium
Demand = Supply
60
40
20
Demand
0
0
100
200
300
400
Quantity
500
600
700
800
Scenarios
What happens when demand exceeds supply?
When the Nintendo Wii was
introduced…demand was very
high but supply was low
Result?? prices skyrocketed !!!
people were able to charge hundreds of dollars
more for the Wii than they had purchased it for
Scenarios
What happens when supply exceeds demand?
When PS4 was introduced, demand for
PlayStation 3 dwindled because people
would rather buy the latest version;
however supply was high.
Result? the price of PlayStation 3
dropped dramatically as retails just wanted to
get rid of the product.
Other Scenarios
Consider …
The price of Hallowe’en candy on
October 25 vs. its price on Nov 1
The price of Christmas decorations
on December 1 versus December 26
Why can’t I find a BBQ at Canadian Tire in October?
Why can’t I find a snowblower in May?