Domino Pizza

Domino’s Pizza Demand Analysis and Forecasting

Johnnie A. Brown

Managerial Economics 550

Dr. Saeed Nabaee-Tabriz

October 28, 2012

A demand analysis is a very vital tool when a company is starting a new venture in a new market or when it needs to introduce a new product in the market. It would indeed be impossible to forecast the profitability of any business venture without analyzing the demand and the sensitivity of the industry and more so based on the location that the company would wish to venture in. Many companies have failed to meet their goals after ignoring this vital component and commencing operations without the adequate information about the market and the industry. Since the sole purpose of any business organization is to provide products and services that add value to the lives of their customers and at the same time earn profit, it important to study the dynamics of the market and to formulate strategies that will help the company achieve its goals and objectives.

Domino Pizza, an internationally renowned establishment, cannot fail to conduct a demand analysis as it ventures out in Detroit. Failure of this venture would negatively affect the company`s image and would also be a huge financial loss as setting up operations requires a lot of capital to pay the contracted workforce, pay for advertising expenses ,pay rental fees and also buying the needed supplies. Domino`s has decided to venture out in Detroit because the prospects look promising and the company hopes to entrench it presence in the area but only the demand analysis will reveal whether the company`s optimism is well founded or if should abandon this venture and choose another location. The variables that will be used to conduct the demand analysis include price, income, size of the population, competition and also the effect on advertising on demand (Mohaupt & Citizens Research Council...