What is Market Research?

1. What is Market Research? http://www.google.com/insights/consumersurveys/home#

2. What is the role of PRICE in the economy? • A neutral source on information • Allows for change in the economy • It allows freedom of choice

3. DEMAND

4. Demand • Demand is the desire to have some good or service and the ability to pay for it. • The law of demand states that when the PRICE of a good or service GOES DOWN, consumers buy MORE, meaning demand increases. • If price goes UP, demand should DECREASE. The Big Bang Theory 5x05 - The Sword - YouTube

5. Demand Curve Price A 30 B 25 DEMAND CURVE C 20 D 15 E 10 F 5 0 1 4 5 2 3 Quantity

6. https://www.youtube.com/watch?v=Z1Auh-G--vQ

7. Demand Changes • Change in quantity demanded is a change in PRICE or QUANTIY. This will cause you to move along the curve, up/down. We call these “MOVERS”

8. Change in Quantity Demand A B Price C D Moves along the curve E F Quantity

9. Demand Changes • Change in demand meanwhile is a change in the AMOUNT YOU BUY. This means the curve will shift to the left or to the right. We call these “SHIFTERS”

10. Change in Demand A A B B Price C C D D Shifts left or right E E F F Quantity

11. There are six factors that influence Demand.

12. Substitutes • Substitutes are goods/services that can be used in place of another good or service. • If the price of a substitute changes, people may be more/less inclined to get the original item. • Example • Pepsi or Coca Cola

13. Substitute’s price goes up Substitute’s price goes down

14. Complements • Complements are goods that are used together, so that a rise in demand in one good will increase the demand for the other good. • Example: hammer & nails

15. Complement’s price goes up Complement’s price goes down

16. Income • People’s ability to buy certain goods is affected by their income. • If their income changes, then their ability to buy certain goods will change.

17. Economic Growth: Higher Incomes Recession hits: Lower Incomes

18. Consumer Tastes • People’s tastes are constantly changing! • Advertising influences people’s tastes. http://www.youtube.com/watch?v=R55e-uHQna0

19. Terms • Normal Goods – goods consumers demand more of when their income rises. • Inferior Goods – goods that consumers demand more of when their income falls.

20. Recession hits: Generic brand goods Economic Growth: Generic brand goods

21. Consumer Expectations • If you expect a good to go on sale next month, you will WAIT to buy that product • Examples • Cars • Gas • Tickle-Me-Elmo

22. Consumers expect price to rise Consumers expect price to fall

23. Market Size • The size of the market is based on the number of consumers. • If people leave a region, the market size will decrease meaning the curve will shift to the left and vice versa. • Example • People leaving Buffalo has caused a smaller market size. • More people moving to Florida and Texas has created larger market sizes in these states.

24. Bigger Population Smaller Population

25. Elasticity of Demand • Elasticity of demand is how responsive consumers are to price changes. • Elastic demand – quantity demanded will change greatly as price changes.

26. Elastic Demand Price When demand is elastic, prices will not change much, but quantity demanded will change. 30 25 DEMAND CURVE A 20 B C 15 D E F 10 5 0 1 4 5 2 3 Quantity

27. Elasticity of Demand • Inelastic demand – quantity demanded will change little as price changes.

28. Inelastic Demand Price A When demand is in elastic, prices will change a lot, but quantity demanded will not change much. 30 B 25 DEMAND CURVE C 20 D 15 E 10 F 5 0 10 40 50 20 30 Quantity

29. Are there good substitutes? Yes = elastic No = inelastic What proportion of income does it use? Large = elastic Small = inelastic Is it a necessity or a luxury? Luxury = elastic Necessity = inelastic Factors that Determine Elasticity