Marketing Equilibrating Process Paper

Market Equilibrating Process Paper

Economics 561

December , 2010

University of Phoenix

Market Equilibrating Process Paper

“The operation of the Market depends on the interaction between suppliers and demanders. Market Equilibrium exits when quantity supplied is equal to quantity demanded” (Demand, Supply, and Market Equilibrium, 2010). For example, football and basketball are in season and there is an aggressive market for pizza. The quantity demand is high which causes quantity supply to increase. Competitors include Domino’s, Pizza Hut, and Papa John’s. Industries sales have reduced considerably. A typical large size pizza from these vendors in the past decade has ranged from $15 to $20. This usually does not include tips. However, today’s price for a large size pizza ranges from $5 to $15 with multiple toppings included.

Such a change in the market has created a domino effect. Therefore, to remain competitive within the market, a pizza company must be able to supply pizza at a lesser price value. For this reason, an equilibrium in the market existed between Domino’s Pizza, Papa John’s, and Pizza Hut because the price values were similar in the past. Each vendor as mentioned above would sell pizzas for an average of $15 to $20. In contrast, CiCi’s Pizza has broken this trend.

“CiCi’s Pizza is the home of $4.99 endless pizza, pasta, salad and dessert buffet […]” (Franchise, 2010, p. 1). This company has shattered the market equilibrium. Although this is a highly admired bargain for customers, this changes the dynamics for market equilibrium. In accordance with CiCi’s Pizza, purchasing $15 worth of pizza supplies a consumer with three pizzas respectively. If Domino’s, Pizza Hut, and Papa John’s continue to offer a price value of $15 to $20 for a large size pizza, each company’s revenue would decrease as a result. Meanwhile,...