Basic Marketing Categories - Assignment Example

Demand/supply/determinants/ elasti From the various definitions of demand and supply that I have come across with, I would define demand as the number of units (quantity) of a particular commodity being demanded from the market by consumers who have the capacity to pay in exchange for that particular commodity. Supply, on the other hand, is the number of units (quantity) of that particular product or commodity producers or manufacturers or service providers are willing and able to produce and sell in the market given a particular price level in exchange for the commodity being supplied. Determinants, on the other hand, are those factors that affect the volume or quantity of the products being demanded or being supplied in the market. Aside from prices, there are a host of factors that may either push for an upward or downward effect on the volume of demand or supply exerted towards the market. Among the determinants for demand include taste and preference of consumers, income level of consumers, availability of substitute products, and population. For supply, the determinants include, but are not limited to, production cost, taxes and subsidies, number of producers or suppliers, available technology, and prices of substitutes. Applying some principles in marketing, demand can further be described or categorized as latent demand, and effective demand. While consumers may want to have a number of units of a particular commodity constituting the latent demand for that commodity, only consumers who have the capacity to pay for that commodity at a price level producers are willing to supply will constitute the effective demand. Elasticity, on the other hand, can be simply defined as the degree of change on the volume of demand or supply of a particular product in relation to changes in the behavior of its determinants. For example, a product that has an elastic demand is a product whose volume or quantity being demanded in the market has increased tremendously due to a lower tag price offer in the market. At the same time, such product with elastic demand would have a tremendous decrease in volume of quantity demanded should its price suddenly becomes a bit more than what it previously offered to the market. In other words, elasticity can be described or defined as the degree of changes in the volume of quantity demanded or supplied given the degree of changes in its determinants. Elasticity determined by changes in prices has been referred to as price elasticity, as shown in the example that has been mentioned above. Demand or supply behavior that does not react considerably to changes in the demand or supply determinants is described to be as inelastic. Let us take, for example, the ordinary table salt as a commodity with inelastic demand. This simply means that a lowering of price offer on the ordinary table salt will not constitute an immediate increase in the volume of demand in the market. On the other hand, an increase in the price of table salt will not see an immediate drop in the quantity demanded for it. Such is the behavior of products or commodities with inelastic demand. The concept of elasticity described above also applies to supply. Degree of changes in the quantity of supplies in the market in reaction to changes in the supply determinants refers to elasticity of supply. A technological breakthrough, for example, causing an increase in the supply of electric cars available in the market, can be described as a situation where the car industry has tremendous supply elasticity, as it reacts immediately to changes in one of its supply determinants. Singapore market for motor vehicles Singapore is a small island-country with a vibrant economy in Southeast Asia. According to reports, it has the highest concentration of millionaires in that part of the world, with about 15 percent of the population owning more that one million dollars in asset. Hence, it is no wonder that its motor vehicle market, especially the luxury type, has remained bullish. It has been described as a “established and steadily/rapidly growing market”. Car sales have been up and steadily on the rise. One car dealer of luxury, European type vehicles, for example, is reportedly selling 350 units on a monthly basis. The high demand for motor vehicle in Singapore is buoyed by the conspicuous consumption Singaporeans are known for. They have the money, and surely they can afford to buy such comforts. Being a small country in terms of land area, and with an efficient and reliable government, Singapore has a dependable mass transport system for the general public. The government encourages its citizens to take the public transport system, while it discourages its citizens to use private cars especially within the city and business district areas. It does so because it wants to avoid traffic congestion within the city, and it does so by imposing heavy taxes on motor vehicle ownership and heavy levies on road use. Prices and income, therefore, are factors that affect the demand and supply of motor vehicles in Singapore. Singaporeans have the money, and price, as long as it is right, will seem to have no immediate impact to the demand. Demand will always remain high since Singapore is an affluent community of millionaires. In this regard, taste and preference (another demand determinant) will also affect demand for certain type of vehicles. European, luxury cars will be in high demand due to the growing preference of affluent families for high-class, status symbol in Singapore. Middle class families, on the other hand, will probably consider buying standard, mid-priced cars, but will also consider the efficient transportation system to get around the city. Hence, there is the presence of substitute which is another determinant of demand. There is a fierce competition among car manufacturers and dealers in the Singaporean motor vehicle market. They will be neck in neck selling cars to Singaporeans, of which they will not have difficulty doing at all, since it has been reported that supplies could not even meet demand (at least for luxury vehicles). Not even high taxes can put a dent on the supply side, since whatever they produce, it will surely be gobbled up by the hungry market for such luxury, fanciful item. All determinants go well with the supply side, keeping the quantity being supplied almost unable to keep up with the rising demand. Singapore market for private housing The demand and supply market for Singapore private housing is affected by a host of many factors. The demand side, as explained above is affected by the following determinants: price, taste and preferences, income level, population, and availability of substitute. These determinants seem to affect all areas of the decision-making abilities of average Singaporeans in their buying habits for private housing in Singapore. There are two streams for which Singaporean citizens can acquire housing units for their respective families. One is through the government-initiated mass housing units, of which almost 80 percent of Singaporeans live, and the other one is through the private housing, which is private-sector led, where the remaining 20 percent, on the average, Singaporean citizens live. Nothing is cheap in Singapore, and everything seems to be expensive relative to one’s income. Mass housing prices have been reported to be approaching condo-type private houses available in Singapore. While there is adequate supply being projected to meet the demand for both private and mass housing, prices seem to be going up as reported in some property analysis reports. Population, of course, would be a prime determinant that will affect the demand for private housing. An increasing population naturally requires an increase in housing units, thus a spike in demand for private housing will surely result. Moreover, an increasing income for average Singaporeans will likely alter their taste and preference from mass housing to a more luxurious, more private surroundings a private housing can afford them. This will surely increase the demand for private housing. On the other hand, supply for private housing will largely be affected by the government’s plan to build additional mass housing units. Suppliers or developers of private housing have to take into consideration the government’s projection for population increase, income level of citizens, and projected number of mass housing units to be supplied in the future. Quantity supplied will therefore be limited or influenced by the number of suppliers (the number of housing developers for private housing), and by availability of substitute (the government’s own effort to provide alternative housing units). Suppliers for private housing will have to consider as well the prices being offered for mass housing, although it is expected that the market will opt for private housing if the alternative’s prices already approximate that of private houses. References Mendoza, A. When supply cannot meet demand. [Online] Available at: http://business.inquirer.net/14527/when-supply-cannot-meet-demand [Accessed April 10, 2012] Tu, Y. The dynamics of Singapore private housing market. [Online] Available at: http://usj.sagepub.com/content/41/3/605.abstract [Accessed April 10, 2012] Read More