This ppt shows the factors that are affecting demand and supply of electronics industry

1. Factors affecting demand
and supply of Electronics
Industry

2. Introduction to demand and supply
 What is demand?
 Total quantity of a product or service that a consumer is willing to and able to buy
for a given price at a given time period.
 What is supply?
 Refers to the amount a given product or service that suppliers are willing to offer
consumers at a given price at a given time period.

3. Various factors of demand affecting
the electronics industry

4. Price of the commodity
 The price of the commodity has an inverse relationship with the demand. As the
price falls the demand increases and vice versa. This is known as the law of
demand.
 Example:
 Apple iPhone sales have dropped in India by 42% in the Jan-March quarter of
2019 as compared to previous year quarter.

5. Price of Related Goods
 There are two kinds of related goods namely:
a) Substitute Goods
b) Complimentary Goods
 Substitute Goods are goods that can be used in place of one another.
 In the case of substitute goods if the price of good X increases then the demand for good Y
increases.
 Complimentary goods are goods that are used in conjunction with one another typically for greater
value.
 In case of increase in price of good X, demand for good Y falls.

6.  Example:
 The demand for the Xiaomi phones are more as compared to its competitors like Samsung and
Realme as Xiaomi offers the same product with similar features at a comparatively lower cost.
 Example:
 If the price of printers increases then the demand for printers will decrease therefore resulting in
the decline in the demand for cartridges.

7. Expected Future Price
 If the consumer expects the price of the product to rise in the coming future then
the demand for the product will increase in the present as there will be price hike
in the future.
 In India there is a general tendency to wait for various festive occasions such as
Diwali where the prices of goods are expected to fall therefore people visit online
portals such as amazon and Flipkart around that time to make any electronic
purchases, therefore demand increases around those festive occasions.

8. Income of the consumer
 There is a direct(positive) relationship between income of the consumer and the
general demand for a good.
 Example:
 Since the per capita income of the people in USA is greater than that of the
people in India hence, people there are able to afford more expensive products.
Therefore the demand for a brand like the Alienware laptop is greater in the USA.

9. Taste and preferences of Consumers
 Tastes and preferences have a direct relation with the demand. If the tastes
change favorably towards a product then its demand increases and vice versa.
 Example:
 With the launch of any new iphone model, the earlier ones tend to go out of
fashion therefore, consumers preferences are no longer inclined towards them
thus resulting in a decrease in demand.

10. Distribution of Income
 Equal distribution of income results in higher demand for a particular product as
the purchasing power of such an economy will be higher.
 Example:
 In India there is unequal distribution of income. As per estimates the richest 1% of
Indians own 58.4% of the total wealth. Due to this a large proportion of the
population is unable to afford expensive tablets like the various iphone tablets
and phones.

11. Factors of Supply affecting the
electronics industry

12. Price of product
 As per the law of supply if the price of the product increases then there is a
subsequent increase in it’s supply as well, other factors remaining constant and
vice versa.

13. Input Price
 Fall in input price reduces the cost of production therefore increasing profit
margin thereby encouraging suppliers to increase supply.
 Example:
 Reduction in the cost of compressor in a fridge will reduce the overall
manufacturing cost of one unit thereby potrntially increasing the number of units
supplied.

14. Size of Market
 Large scale production will reduce the per unit cost of production therefore once
again increasing the profit margin of a producer. This also allows him to sell his
product to a large number of consumers thus the producer will be able to increase
his supply.
 Example:
 Brands like HP, Lenovo and Apple find the market size of india to be large and
therefore market their products here.

15. Factor prices and their availability
 Largely classified into land, labor, capital and entrepreneur.
 Easy availability of all factors at relatively cheap prices will help in reducing the
cost of production.
 Example:
 Apple does the assembling of its products in China due to cheap labour costs as
compared to those in the USA. This helps in producing more and thereby
supplying more.

16. Government Policies
 Different fiscal and industrial policies have a great impact on the overall supply of
a product.
 Example:
 The price of a particular model of Godrej washing machine increased from 23,570
rupees to 24,737 rupees after the enrollment of GST in July 2017 where it was
initially placed under the 28% tax slab. The tax on the same has now been reduced
to 18%.
 An increase in taxes leads to increase cost of production thus reduced supply.