John Mayers Reconsiders his Purchases: There is more to Demand than just Desire
Every individual and household faces multiple wants, needs and desires. Which of these can be construed as Demand from the perspective of the firm? Once a particular need has been selected for satiation, how does a consumer decide which product or service to buy? Which factors shape the demand for a commodity? Also are there any differences in the demand or are all buyers equal in the urgency of their need, information and ability to be influenced by advertising, etc. The caselet ably brings out the subtle nuances of demand and the factors that influence it. John Mayers, the protagonist is called upon to make three decisions, each of which touch upon different aspects of demand. He must decide which commodities to purchase and also to time his purchases – should he wait for prices to fall or buy despite rising prices? John also called upon to develop a pricing perspective as two prospective buyers bid for his art work. Of the two, John looks at who is keen to cough up more money rather than go without a Mayer’s original.
Expected Learning Outcomes
The caselet seeks to familiarize the participants with the following concepts:
- • What is demand? Clarifying concepts such as – Desire, ability to pay, willingness to buy, and how a firm can influence these components.
- • Determinants of Demand
- • Role of Price as a key demand determinant and law of demand
- • Demand distinctions
Prerequisite Conceptual Understanding
Demand is one of the foundational concepts in Economics and requires no pre-requisite reinforcement.
- • The students should, however, be aware of basic mathematical concepts such as linear functions, equation of a line, slope, direct and indirect linear relationships, etc.
Positioning and Setting
This case study can be suitably used in the following courses:
- • Introductory session to the subject of Business Economics or Managerial Economics course – To understand how cultures are created, how employees learn culture and how can an organization create a positive culture
- • The concept of ‘Demand ‘ – To give an orientation towards the core economic concept of Demand and to demonstrate how economic decision-making is undertaken
- I. What do you mean by “Demand”? Is it wishful thinking? Is it a feeling or state of mind? Can demand exist if any one of the three aspects - Desire, ability to pay and willingness to buy is missing? In the Mayers household, does a demand for washing machines or for DSLR cameras exist?
- II. Can a modern firm influence the three aspects of “desire, willingness and ability” to ensure that Demand for its products sustains? Discuss these issues in the context of the experience of Rita Mayers.
- III. Draw the demand curve for washing machines and explain the Law of Demand.
- IV. ......................
Case Analysis and Discussion
The discussion should be structured around the following segments in order to arrive at the expected learning outcomes of the caselet............