The law of supply and demand states that if the price for a sound decreases, more will be purchased. This is because increased availability in the market leads people to buy less or not at all unless they are “forced” to by other incentives. Depending on how much you want your product to sell out, this can be applied as an economic incentive strategy with varying results.
According to fundamental economic principles, the price of your product or service is decided by supply and demand. Many of us attempt to ignore this unpleasant reality, but the evidence backs us up:
Demand and Supply:
- P stands for price.
- Q stands for the number of things.
- S stands for supply.
- D stands for direction.
The four fundamental supply and demand laws are as follows:
- If demand rises while supply stays constant, the equilibrium price and quantity rise.
- Demand falls while supply stays constant, resulting in a lower equilibrium price and quantity.
- If supply rises while demand stays constant, the equilibrium price falls, and the quantity increases.
- If supply falls, but demand stays constant, the equilibrium price rises and the quantity declines.
I don’t know about you, but these economic ideas irritate me. I don’t trust them, and you shouldn’t either. Unless, of course, you want them to be true in your case. You may control the rules of supply and demand if you are ready to think and act intelligently. It should come as no surprise, therefore, that controlling supply and demand may help you generate more money in less time and with fewer difficulties. Because only two variables are involved: supply and demand, manipulating supply and demand are relatively simple. You will obtain control over your price and profit margin if you can master these two elements. I’ve been studying ways to defy the Law of Supply and Demand for the last three and a half years, and the results have been astounding. As a consequence of the lessons I’ve learned, our typical website pricing has increased from less than $1,000 to over $4,000, and our margins have increased from less than 10% to consistently in the 30% to 40% area. Organize all of your money-making ideas in one location across all of your document applications.
Manipulating the law of demand and supply:
Lesson 1: Positioning Yourself as a Limited-Edition Good.
Isn’t it true that diamonds are a scarce commodity? Wrong! Several of the world’s most significant diamond manufacturers have vaults full of gems that would cause diamond prices to drop if released onto the market. De Beers’ great marketing contributed to the idea of diamonds as scarce. You’ve probably heard the famous phrase they came up with: “A diamond is forever.” In fact, “A Diamond Is Forever” was awarded the finest advertising tagline of the twentieth century by Advertising Age magazine in 2000. At their foundation, De Beers and the other diamond firms positioned themselves in the manner their customers desired to feel. They saw that their prospects wanted to feel significant, successful, superior to others, caring, and dedicated. So de Beers made sure that its position matched what its prospects wanted and then promoted to those needs.
What do you suppose would have occurred if De Beers’ shops were in a terrible section of town, with holes in the carpet, nasty salespeople, and one-carat diamonds beginning at just $10.00? If you predicted they’d instantly sabotage the rare commodity status they’d worked so hard to achieve, you’d be correct. Nonetheless, this is precisely what the majority of business owners do. We put forth a lot of effort to position and sell our product or service, to have it all ruined by one or two simple things.
Lesson 2: Gain Supply Control.
No, I’m not advising that you engage in monopolistic activities, although De Beers is said to have done so. De Beers has even been accused of buying significant diamonds from rivals and merely stockpiling them to obtain control of the diamond supply. So, as a low-budget entrepreneur, what actions can you take to control your product or service’s delivery to the market? Is it reasonable to believe that we will ever be able to manage supply? “YES!” says the responder emphatically. However, you must first evaluate and consider your market position to accomplish so.
“Hey, I have this wonderful idea to open a shoe business that sells shoes online,” Nick Swinmurns’ original presentation, for example, may have gone something like this. Is that something you’d want to be a part of?” After then, I’m sure he heard some silence…and a LOT of “NOs.” Who in their right mind would purchase shoes without first seeing, touching, and, most importantly, trying them on? Nick Swinmurn’s first voicemail persuading him to invest in the firm nearly got erased by Tony Hsieh, who is now renowned for bringing Zappos from a failing startup to a corporation with over $1 billion in sales. Why? Because shoes may be purchased everywhere! You’ll never be able to manage the supply… Is there a difference?
Consider how Zappos has effectively managed supply if you’re acquainted with the company. Do you have any examples? Here are some of mine:
- Singular Access — You can purchase shoes from hundreds of different sites, but if you want to buy shoes from Zappos, you can only do so at Zappos.com.
- Sure, you can purchase a new pair of boots from your local boot shop, but do they have 3,251 different boots to choose from? No, I don’t believe so.
- Surprisingly Remarkable Service – There’s nothing worse than going to a shop to buy those new boots and having the sales guy start telling you why today is the worst day of his life as soon as you walk in the door. You hear that his vehicle (which isn’t his, but his girlfriend) broke down on the way to work. He had to hitchhike to go to work, and the person who picked him up happened to know his girlfriend. He not only knew her, but he knew her intimately…too intimately. Your sales rep then starts to tell you all about the fight he had with his girlfriend’s other man friend…and all the reasons why he knew his girlfriend was a tramp all along. All of this occurs as you wait for him to return with the boots, and your two children are busy ruining the shoe section. Zappos recognized the struggle (for some) of going to a shoe shop and the often lousy service provided there. So, if you want an exceptional shoe-buying experience, Zappos is the place to go.
- Return Policy That Shocks — Most people are acquainted with the now-famous Nordstrom tire return tale. That’s the one when a customer walked into the business and demanded a refund on a tire they’d bought. The cashier reimbursed the customer’s money, although Nordstrom had never sold tires. Shocking…right? That’s why the tale has been handed down for decades, but it’s also a testament to Nordstrom’s very generous return policy. When it comes to organizing their return policy, Zappos stole a leaf from Nordstrom’s playbook. You have 365 days to return your shoes…unless you bought them on February 29th, in which case you have a 4-year return policy. That’s correct, and you have until the following leap year to return your shoes. So not only will Zappos offer you plenty of time to replace your shoes, but they will also pay the cost of sending them back to you. What other shoe retailer has a return policy like that?
- Shopping in Your Underpants – While I don’t recommend it, you can purchase your next pair of shoes while lounging on your couch in your underwear. This makes shoe purchasing a breeze. What do you have to lose with free delivery both ways? They’ve made shoe buying on Zappos.com completely risk-free. Suppose you want the world’s most extensive assortment of shoes, exceptional customer service, an industry-leading return policy, and the convenience of purchasing from the comfort of your own home. In that case, there is only one option: Zappos.com. You can see how they manage the supply today.
Here’s how to keep your supply under control:
- Your Timetable
So, how about you? How do you manage supply? Let’s pretend you’re the proud proprietor of a marketing consultancy firm. You’re a secretary, an IT expert, a salesperson, and a consultant. Let’s pretend you’re a bit less than busy for this example. Let’s be honest for a moment. You’re in urgent need of some fresh customers. The phone rings, you pick it up (which you shouldn’t), and it’s your ideal client calling to set up an appointment with you.
Your instinct and mine are to say that we may meet any day and at any hour you desire. In reality, you would be making a significant error if you said this. First, you’re admitting that your calendar isn’t jam-packed if you say you can meet with your prospect at any moment. You’re implicitly acknowledging that you’re not very competent at what you do if you concede that your calendar isn’t particularly packed. After all, wouldn’t your calendar be packed entirely if you’re so good at giving marketing advice?
Don’t be concerned! The issue isn’t as bad as it seems. Isn’t it true that you have complete control over your schedule? Isn’t it true that you choose when you’re available? You do, of course. You should plan meetings with yourself even if you don’t discuss with other customers and prospects. You have proposals to write, phone calls to make, and children to take to softball practice, so you have a lot on your plate. You’re very busy! You only have a certain amount of time, so make sure your potential customer knows this.
- Your Place of Work
It’s a challenging task to become the most well-known marketing consultant and one I wouldn’t advocate taking on. It is, nevertheless, not tough to become the number one direct response marketing consultant in the lawn care sector. Have you noticed the difference? One is broad and general, while the other is restricted and particular. Establishing oneself as the most regarded marketing expert in the public market is like to a beginner mountain climber attempting to scale Mount Everest for the first time. This inexperienced climber will shortly realize that she lacks the stamina to reach the summit and abandon her ambitious ambition. This is precisely what the majority of business owners do. They attempt to climb the highest mountain first, fail, and give up hope. Before attempting Everest, the astute rookie mountain climber recognizes his limitations and chooses lower peaks to conquer. After summiting his first peak, he gets confidence, recognition, and a reputation as a genuine mountain climber. He can then successfully climb Everest using the skills and information while summiting the lower elevations. If you want to be successful in your chosen market, you need to establish yourself as the one and only expert in your subject. And the only way to do it is to choose a small market and stake your claim. You acquire instant control oversupply while also creating demand for yourself by placing yourself in this way.
Lesson 3: Produce Demand.
People want to buy from and conduct business with people in high demand. Consider Apple, Lamborghini, L.A.’s trendiest nightclub, Hotel Zaza, and Sir Richard Branson. All of them are in tall order. Everyone wants to own one or to be linked with one. If you look at each one closely, you’ll see that they all have high costs attached to them. They have all effectively altered the law of supply and demand by creating demand. On the other hand, Apple provides a simple case study on how to meet demand. This is how they create demand:
- Start with the evangelists.
They are masters at creating excitement for the newest to-be-released gizmo. You’ll notice that Apple always starts the manufacturing demand process with its evangelists if you pay attention. First, they pack an auditorium with journalists, bloggers, and other influencers, then wow them with the device’s new features and advantages.
- Tell them what they need to know.
Every aspect of Apple’s launch events has been meticulously planned and rehearsed to guarantee one thing: that their evangelists get the essential message Apple wants them to convey back to their markets. Not only do they want people to grasp their central message, but they also want them to have a say in how it’s delivered.
- Seeds to Plant
Have you ever noticed how, before every major Apple product launch, a product prototype is accidentally left at a restaurant or nightclub and winds up in the hands of a reporter? Coincidence? Maybe, but I don’t think so. I’d be ready to guess that these “accidents” are meticulously seeded by Apple, although Apple would never acknowledge it.
- Soak the Seeds
As an Apple release date approaches, more information is leaked to the company’s evangelists. They seem to provide gasoline to their evangelists’ fires, assisting them in spreading the gospel.
- Allow for the germination of the seeds.
Apple always announces the debut of their newest device far in advance of the actual day of release. This allows enough time for Apple’s evangelists to spread the word and opponents to unleash their attacks. It is critical for Apple’s messaging to have opponents. This conflict between critics and evangelists drives both sides to grow more adamant about their views on Apple’s goods. It makes their evangelists defend their opinions and support for the soon-to-be-released device with zeal.
- So, how about you?
What can you do to meet demand if you have a limited budget and time? The good news is that you can replicate Apple’s method on a lesser scale. Identifying and understanding your evangelists is the first step. It would be best if you treated them differently from your regular clients. First, you must provide them with information and access to your new product or service. Then, you must instruct them on what message to distribute and how to distribute it.
Don’t make things more difficult for yourself. Maintain a straightforward approach. Just go for it.
Lesson 4: It’s important to remember.
It’s essential. Don’t forget to review Lesson #1.
Conclusion
Isn’t it all a little too simple? First, you need to persuade your consumers and prospects that you are a valuable commodity. But how can you do it with the products you sell? DeBeers used diamonds. Many other businesses, big and small, have followed suit with their goods and services. All you have to do now is find out how to keep track of the supply of whatever you’re producing or providing. Isn’t it something your product can’t do? That’s something Zappos might have said as well. After all, there are a million shoe retailers, but they are the only ones that provide the same level of flexibility and quantity. What can you provide that no one else in your industry can? Finally, begin to create your demand. “However, it all seems like conspiracies and dirty business dealings.” Continue to persuade yourself that while your rivals, like Apple, flee and create their demand. So, yes, it is simple. All you have to do now is put these formulae into action. Author Information: Ugly Mug Marketing was founded by Wayne Mullins, the author of So You Have a Website… So, what’s next? Wayne and his team work with some of the most well-known brands on the internet, assisting them in standing out from the crowd and generating more revenue. His blog has further information.
Frequently Asked Question
What are the factors affecting the law of supply and demand?
A: Supply and demand can be affected by various factors such as the cost of raw materials, production costs, transport costs, fixed or variable income levels in different countries.
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