December 11, 2011

Managerial Economics of Demand - Economics for CEOs

"Demand analysis seeks to search out and measure the forces that determine sales." Joel Dean

The two main managerial purposes of demand analysis are:

1. Forecasting sales, and
2. Manipulating demand

To use demand studies to influence or manipulate demand in an active way, the management must recognize the degree to which sales are a result of external economic environment as well as the actions of the company itself. Sales volumes or the underlying demand will differ with money spent on advertising, price policy, product improvements, sales effort etc. Forecasting sales for policy of no change in the existing company controlled economic variables is to be used as a benchmark for estimating the consequences of other plans for adjusting those economic variables.

Concepts of Demand Theory Highlighted in the Chapter

Demand Schedule
Demand Function
Producers' Goods, Consumers' Goods
Durable Goods, Perishable Goods
Derived Demand, Autonomous Demand
Industry Demand, Compay Demand
Short-run Demand, Long-run Demand
Demand Fluctuation, Long-run Trend
Total Market, Market Segment
Elasticity of Demand,

Methods of Forecasting Demand

Forecasting Sales of Established Products

Forecasting the Demand for New Products

Criteria of a Good Forecasting Method

Price-Demand Relations

Income-Demand Relations

Multiple Variables - Demand Relations

Article of the series
Economics for CEOs - Managerial Economics by Joel Dean

Article originally published in

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