The paper "Supply and Demand as a Fundamental Price Determination Model" is a wonderful example of an assignment on business. Supply and demand is a fundamental price determination model in economics that helps marketers establish prices for their products and services. The model posits that whenever the demand for a particular product is higher than the demand, the price of the commodity is likely to lower in order to attract more consumers. However, when the demand for the same product rises higher than the supply, the price of the product definitely rises as marketers make more profits.
The model thus implies that any market factor that affects either the supply or demand of a product will definitely affect the price of the same (Ireland, 2008). Marketers are therefore always wary of any factor that may affect either of the two in order to customize the production and delivery of their products and services in order to prevent any unnecessary loses. Product X and Y alongside are substitute products. This implies that a costumer can opt for either of the two. As competing products, the marketers for the two products must therefore monitor the actions of each other in order to maintain their market shares.
Substitution products are those that a consumer can use either. A shopper, who buys a brand of margarine, may not purchase butter since the two products perform the same function. However, the two enjoy specific market shares that have successfully sustained their profitability thus far. Marketers for either product must monitor the activities of the other since an increase in the other’ s market share definitely influences the other’ s market share.
Any factor that affects the market of product Y will result in either a positive or a negative effect on product X depending on the magnitude of the effect on the previous product. Additional factors that affect the purchase of a product include tastes, preferences and budgets of the potential customers. An effective marketer determines the prevalence of such factors on a product before introducing a product since such factors will affect the performance of the product.
Alexander, B. (2010). International Financial Reporting and Analysis (5th edition). Oxford: Oxford university press, 2010. Print.
Blackshaw, P. (2008). Satisfied Customers Tell Three Friends, Angry Customers Tell 3,000: Running a Business in Today's Consumer Driven World. New York: Doubleday.
Ireland, H. (2008). Understanding Business Strategy. New York: Free Press.
Kent, P. & Tara, C. (2011). Poor Richard's Internet Marketing and Promotions: How to Promote Yourself, Your Business, Your Ideas Online. Lakewood, CO: Top Floor Pub.
Kotler, P. & Kevin, K. (2010). Marketing Management. Upper Saddle River: Pearson Prentice Hall.