Factors That Influence Supply and Demand Free Essay Samples & Outline
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Sample Essay on Factors That Influence Supply and Demand for the Products or Services
Supply is the quantity of services and goods supplied by the business, whereas demand is the amount of goods and services that customers buy (Girju 2012). Various factors influence supply and demand in the hospitality industry. For instance, product and services demands are affected by the taste of customers and market preferences. The demand for goods and services depends on the habits, advertisements, tastes, new technologies used in production, customs, and the preferences of the customers. The income of the customers implies their ability to purchase a certain commodity or services.
These factors can increase the demand. Similarly, the quality of goods and services offered in the market influence customers’ purchasing behavior. The price and availability of products in the market from other competitors are also determinants of supply and demand. If other competitors offer similar products and service at a lower or higher price, customers will either buy or go for competitors’ products depending on their choices and preferences.
Further, population growth increases the demand for the products by customers. For instance, the rise of population in a small community may increase the demand for local dishes thus increasing their supply. The government’s economic policies influence the demand for commodities (Girju 2012). For example, if the government decides to impose massive taxes on particular products in the form of excise duty, sales tax may increase the commodity price; hence, decreasing the demand.
Additionally, several factors influence the supply of goods and services in the hospitality business. The cost and capacity of production, including interest charges, the cost of raw materials used in the production of goods and wages for hotel workers, are such factors. Moreover, competition from other hospitality ventures with similar services and products, as well as the prices offered dictates the supply of products (Girju 2012). The marketing strategies also determine the number of customers reached and their knowledge of the products and services provided. Branding, which is all about product reputation, influences influence the supply of goods. Finally, the technology used in production of goods (preparing food and drinks) may affect the taste and preference of customers thus increasing its supply.
Girju, M. M. (2012). Variation in consumption: Supply and demand factors that affect individual
consumer behavior. Thesis, the University of Texas at Dallas.