BUS602: Marketing Management

Review this brief video lecture from a professor on demand and supply. Understand that the market forces of consumer demand and suppliers of goods willing to supply goods and services are dynamic, not static. Therefore, the pricing of goods and services is subject to change when demand and supply conditions change.

Marketers face the challenge of determining what quantities of the offering would be demanded or purchased by lowering prices or increasing prices. This concerns the slope of the demand curve. A rather flat demand curve is called elastic, and a steep demand curve is called inelastic, which refers to the sensitivity or responsiveness of the quantity demanded by consumers due to price changes by the marketer. An elastic demand curve means that if the price is changed up or down, the demand or willingness to pay or buy would be greater than the price change. An inelastic demand curve means that consumers are more indifferent to changes in price; therefore, a change in price would not result in a significant change in the quantity demanded.

Marketers generally must make educated estimates or models of the demand elasticity for their goods and services. Changing prices up or down regularly would develop real data on demand elasticity, but it would create havoc with consumers and is therefore unrealistic.