Demand Theory

Ever wonder why some internet streaming products—and no, not just, um, "art film" services—can raise streaming prices almost 80% and get away with it? Why some companies choose to make offer their apps free with ads? Why a Manufacturer’s Suggested Retail Price v. a Street Price is so much higher?

You can pretty much bet that someone did a demand theory analysis as part of the decision-making process. Companies like Apple and DeBeers have become expert at controlling supply and maintaining prices while marketing elitism to maximize their profit margins.

Academic study of economics is something that marketing, accounting, and business majors often need to study in order to get a handle on the whats, whys, and hows of the financial and business markets. The study of Demand Theory, which explores the ratios between consumers and demand for goods and services when factors such as availability and price are factored in, is a fundamental component of microeconomics. Savvy marketing professionals can use the data to determine timing of new product launches, when and how to launch promotional campaigns, and when to hold back supply v. when to cut prices.