Dominio's Pizza

Demand Analysis and Forecast for Domino’s Pizza

Demographic and Independent Variables Relevant In Demand Analysis

Good's Own Price

The price of the product directly affects its demand. This basically follows the law of demand which states that when the prices of a product or service rise, the quantity demanded falls. This also means that when prices drop, demand will rise (About.com Determinants of demand). This relationship negatively means that an increase in price will induce a decrease in the quantity demanded. This negative relationship is represented by a downward slope of the consumer demand curve. In the Ft.Lauderdale Florida 33325 community, the price of pizza ranges between $5 to $12 and that of soda from $1 to $2.

Table 1.1

Pizza Price Soda Price

Period 1 5 1

Period 2 8 2

Period 3 10 3

Period 4 12 4

Income

Income is one demographic variable that affects the businesses and therefore, cannot be ignored. People with lower incomes have less disposable income and are more sensitive to price. Income measures the ability of a given population to participate in transactions. When income rises, the quantity demanded also increase whereas when income falls, demand also falls. This concept is however subject to that of marginal utility. For instance, the first pint of ice cream tastes delicious so you might have another, but after that the marginal utility starts to decrease. If there is an increase in income, then the demand will go up. The daily average income of the people in the community ranges from $10 to $100.

Table 1.2

Period 1 Period 2 Period 3 Period 4

Average income 10 50 80 100

Changes in Tastes and Preferences

This is the desire, emotion, or preference for a good or service. When the taste of a product rise, the quantity demanded also rises. Likewise, when the taste falls, quantity demanded will decrease.

A change in preference is a complete endogenous change in taste. If the change in preference...