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John Mayers Reconsiders His Purchases: There is More to Demand Than Just Desire

CASELET, MANAGERIAL ECONOMICS
ET Cases, 2 pages
AUTHOR(S) : Firdaus Khan

Case Preview

John Mayers Reconsiders his Purchases: There is more to Demand than just Desire

 

Admiring his fresh painting titled ‘My Muse, My Soulmate’ John Mayers (John) put down his paint brush and sipped his green tea. He made a mental note of the day’s itinerary – a trip to the digital store with his wife, Rita, an appointment with his financial advisor and later in the day a meeting with his agent. John looked out of the window to take in the morning sun and prepared for a hectic day ahead.

At Croma retail store, John walked straight up to the electronic gadgets section while his wife headed to the home appliances section. John married Rita D’costa (Rita) six months ago at Goa in a charming 17th century cathedral before a small group of family and friends. The fairy tale wedding was the outcome of a two year courtship between the upcoming artist and the advertising professional. The phrase opposites attract fit perfectly for this young couple. John was the dreamer while Rita was the pragmatist. John believed in paying a premium for quality while Rita was a bargain hunter. A desire to set up and furnish their own nest was what had brought John and Rita to Croma retail store that morning.......................

Teaching Note Preview

John Mayers Reconsiders his Purchases: There is more to Demand than just Desire

 

Synopsis

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

 

Assignment Questions

  • 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............

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Abstract


Demand is probably the most familiar concept in Economics and Business. Yet most firms do not quite get their finger on the pulse of demand indicators, often losing leadership positions in the bargain. This caselet is highly suitable for discussing the three pillars of Demand and how the absence of any one feature renders it impotent. Also, the caselet highlights the determinants of demand, particularly developing the importance and application of Price of the product as a key determinant. The basic building block of Economics - 'Law of Demand' and its exception is highlighted. This caselet is an excellent tool to deliver the concept of types of Demand. John Mayers (John), an upcoming artist, struggles as a newly-wed trying to set up a home and planning for future investments. Which gadgets or services should he and his wife purchase? John is torn between his desire to own a high-end camera and his wife's eagerness to buy home appliances at discounted prices. John also wonders whether buying shares is similar to buying a house. As an artist he tries to discern which prospective client will pay a higher price for his painting?



Pedagogical Objectives

  • To understand, unequivocally, the three aspects that constitute Demand
  • To list out and closely consider the factors which determine demand for a commodity or service
  • To assess and understand the role of Price as one of the key factors of Demand
  • To study the different nuances of Demand



This Case Pack Includes:
- Abstract
- Caselet
- Teaching Note (**ONLY for Academicians)
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