Demand Distinctions

Products
Milk, Rice, Oil, Notebooks, Tooth Paste, Soap

Washing Machine, Mixie, Iron Box, System, Printer

Power looms, X-ray Machine, ATM machine

Nylon, Ryan, Polythene, cotton

Sodium, Potassium, Nitrate, calcium, magnesium

Umbrella, Ice-cream, A/C machine, Silk sarees

Tyres, rubber, pesticides,

 Why Demand Distinctions?

Demand is not same for all the products.

Food product vary in demand

Industrial products vary as per the requirements of

the concerned industry

Durable and non-durable demand goods demand

vary as per the usage.
Important Demand Distinctions are:

1. Producers’ goods and Consumers’ goods

2. Durable goods and non-durable goods
3. Derived demand and autonomous demand
4. Industry demand and company demand
5. Short-run demand and long-run demand
6. Short-term demand fluctuations and long-term
trends
7. Total market and market segment
 Producers’ goods and consumers’ goods
Producers’ goods:
are those which are used for the production of
other goods.
Eg. Machines, power looms, chemicals, fibers,
Reliance Chemicals, Bombay high, coal.
Consumers’ goods:
are those which are used for final consumption.
They satisfy the consumers wants directly.
Eg. Prepared foods, ready-made cloths, houses etc.
Durable goods: Eg. Washing machine, TV, Mobile
•Utility is not exhaustible by single use.
•Serviceable and are subject to repetitive use.
•The reason for its replacement is mainly obsolescence due to
technical developments.
•The criteria for purchasing durable goods include the price
and income of the consumer and the maintenance and
operating cost.
•Style, convenience and other factors play a major role it
determining the demand.
Non-durable goods: Eg. News paper
• Made for the current demand and depends on current
condition. Single use only. Demand depends on their current
price, income of the consumer and fashion.
Derived Demand:
Eg. UPS/Computer, Car/petrol, Stove/cooking gas,
Hospital/Radiology, Cement/Building, Cars/Tyres
When the demand for a product is tied to the purchase of
a parent product it is called derived demand.
If products are closely related as Cement and Building
there is no distinctive demand determinant or their own.
Autonomous Demand:
Eg. House, Food items, Dress materials, Cool drinks
Demand arises independently
Demand arises because of physiological, physical,
biological needs.
Determinants of demand is also confined to individual’s
needs.
Industry Demand and Company Demand:
Eg. Rubber, cotton, Textile, Flower, Iron, Steel, Jute, Sugar
Eg. TVS,MRF, GHCL Mills, SAIL,NLC, Apollo, FORD
Industry covers all the firms producing similar products.
Industry demand denote the total demand for the products of a
particular industry
Company demand is demand for the products of a particular
company
Products of one manufacturer can be substituted by the products of
another even though the brand names differ.
Industry demand schedule represents the relation of the price of the
product to the quantity that will be bought from all the firms.
Industry demand can be further classified according to customer-
groups . Eg. Steel by builders, manufacturers
Mere industry demand is not enough, its contribution to the total
demand ie. Company's share in industry is more important.
Short-run demand:
Eg. Seasonal products: Ice-Cream, Umbrella, Silk sarees, A/C,
Crackers, Juices

Short run demand refers to the demand with its immediate

reaction to price changes etc.,
Demand for goods for a short period.
EB tariff reduced – people will go for Electronic Goods.
Petrol price hiked – people immediately like to fill their
vehicle tanks.
Tomato, onion price increased people will buy it large
quantities
The demand determinant in short-run is whether the
competitors will follow.
Long-run demand:
Eg. Gold – Price during 2000 – Rs. 400/gm
Price during 2003 - Rs. 600/gm
Price during 2011 – Rs. 2200/gm
Demand for a good that exist over a long period.
Demand that will ultimately occur as a result of changes in
price, promotion or product improvement, after enough
time has been let to adjust itself to the new situation.
In the long-run also entry of competitors. Substitutes may
follow.
Gold can be replaced by which metal eg. Platinum, one
gram gold ornaments.
Short-term demand and long-term demand:

Short-term are year to year fluctuations may be due to

certain strategic variables like, income, fashion, taste,
competitors, substitutes etc., Eg. Garments
Short-term trend provide basis for firm’s planning like
operations, production, purchasing, man-power.

Long-term demand – trends occur due to basic changes in

the framework. Eg. Technology, way of life, shift in tastes.
Projection in the long-run demand is sought for long-term
commitments, capital budgeting etc.
Individual Demand – Quantity demanded by an Individual
Purchaser at a given price.
Market Demand – Quantity demanded by all the purchaser
together

Total market - Demand for a product has to be studied not

only in its totality but also by breaking it into different
segments like, geographic area, sub-products, uses of
products, distribution channels etc.
Market segment: Division of demand gives rise to market
segment. Eg. Geographic area – Regional, Divisional, City,
Rural, Urban,