Trigger 5: How does the change of the price affect demand in the market?

1.  How to create demand? 

Five strategies for generating demand


Consumer research, understand your customer, the market and trends
Produce quality information for the customer
Publish customer reviews and respond to bad reviews
One time offers, to introduce the product to potential customers
Reward loyal customers, make them feel special and exclusive

Pricing and demand:

"Customer value‐based pricing is increasingly recognised by academics and practitioners as the most effective approach to pricing for companies wishing to achieve increased profitability and sustained success. However, despite this apparent support for the implementation of value‐based pricing, the practical reality is that more than 80 percent of companies continue to price their products and services primarily on the basis of costs and/or competitive price levels. 

Based on a survey of 81 executives representing a wide range of B2B and B2C industries in Germany, Austria, China, and the USA, five main obstacles to the implementation of value‐based pricing strategies have been identified: deficits in value assessment; deficits in value communication; lack of effective market segmentation; deficits in sales force management; and lack of support from senior management. "

2.       How to identify demand?

“By assessing all forces and factors, we can identify and capitalize on demand in its three forms: current,emerging and latent.

Current demand reflects expressed needs and wants. The opportunity lies in continuously improving your product to better meet consumer demands. As an example, Bud Light Lime, which was one of the most successful product launches of all time, emerged from research by Anheuser-Busch and The Cambridge Group showing that consumers desired slightly sweeter alcoholic beverages.

Emerging demand reflects needs that are just beginning to be articulated – those held by a small but growing consumer segment. For example, we helped a large dairy company capitalize on growing non-dairy beverage trends after it purchased a major soy milk brand.

Latent demand sits outside the box. It comprises unrealized needs that have yet to be articulated by consumers, yet are potentially disruptive and highly transformational.

By using our Customer Demand Analysis methodology, we can answer critical product and brand questions. For example:

·         What features or benefits should be added to a product?

·         Do opportunities exist for new brands?

·         What pricing structure would maximize profits?

·         Are there product lines that should be discontinued?

·         What competitive actions will best protect your portfolio?” 

Source: http://www.thecambridgegroup.com/approach/identify/

Identifying supply and demand to understand price action and vice versa. Tips for traders: 

3.       What are the factors involved in supply chain that affect the change of price?

·         Cost of production

·         Wanted profit

·         Market demand

·         Industry standards

·         Skill level

·         Experience

·         Your business strategy

·         Your service

·         Your client

·         Competition

·         Marketing methods

https://business.tutsplus.com/articles/nine-factors-to-consider-when-determining-your-price--fsw-98 and http://www.businessmanagementideas.com/pricing/price-determination-6-factors-affecting-price-determination-of-product/2267