The Impact of Supply and Demand on Polo Mint Prices in the UK Market

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Economics for Business
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Table of Contents
Essay:...............................................................................................................................................3
References;....................................................................................................................................16
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Essay:
This assessment is based on the concepts of economic factors and going to be created to obtain
relevant information about the factor that is playing a vital role in the pricing of polo mints in the
UK market. Concepts of this assessment will be focused on the factors that are liable for the
shifting in demand and supply curves. There are numerous factors which affect the prices of
goods and create alteration in market demand and supply of goods. Through this report, the light
of explanation will be thrown on such factors so that relevant understanding of such factors can
be obtained. Through the understanding of these concepts, the user can manage the supply and
demand factors correctly and ensure continued success for the businesses.
Supply:
Supply can be explained as the economic term which explains the quantity of a product that is
available for the consumer to buy any time from the market. In another view, supply presents the
quantity that is available with the seller to sell in the market.
Demand:
This term presents the number of services or goods for which the active market of consumers is
available at offered prices. In the explanatory view, it stands for the willingness of consumers to
buy a service or product from the open market at proposed rates.
Supply curve Demand curve
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(Figure: Shifting behaviour of demand and supply curve)
(Source: Toppr, 2019)
The concept of supply and demand:
The relationbetween supply and demand is a very crucial concept in business management
activities to maximise profits through the active management of supplied-quantity as per
demand. As per the concept, declined supply and enhanced demand will motivate the price
increment whereas enhanced demand and declined supply will create a negative impact on prices
(Carvalho and Schiozer, 2015). For example, the increment in demand will reduce the
availability of product which will lead to the enhancement in prices. In the same manner, the
increment in supply will create pressure on prices and the declining trend will be shown by the
prices.
Equilibrium concept of demand and supply:
This concept refers to the situation in which the total supply of goods becomes equal to the total
demand. Here, allocation arrangements of resources become absolutely perfect because enough
supply is available for the consumption of every individual. The condition of equilibrium is
equal to the perfect market condition because enough active market is available for suppliers and
sufficient goods are available for consumers(Agarwal, 2017). Polo Mint has a competitive
market in the UK because several companies are selling similar products with other brand names
so the situation of Equilibrium is not possible for thePolo Mint. As per the concept, if the supply
of the Polo Mint becomes equal to the market demand of Polo mint, the situation will be called
Equilibrium among demand and supply.
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(Figure: intersect behaviour of supply and demand line)
(Source: Toppr, 2019)
Above graph is indicating that equilibrium condition refers to the equality of demand and supply.
At this point, the line of demand and supply becomes intersect and consent behaviour is shown
by the price.
Factors which leads to the shift in demand for a product;
There are numerous controllable and uncontrollable factors which are liable for the shift in the
demand curve. Some major factors are explained below;
 Change in consumer income:
Alteration in income level is directly related to the alterations that take place in demand level.
For example, the increment in income will increase the availability of disposable amounts with
the consumer which will enhance the consumption and shift the demand curve to the right
(Toppr, 2019). Similarly,the change in reduction in income will force people to reduce the
consumption which will lead to the reduction in demand.
Polo Mint is a low price product so reduction or increment in income upto a limited stage will
not affect the demand. After a significant change, a decrease in incomeswill motivate the people
to reduce the spending and the same will decrease the market demand of Polo Mint.
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 Advertisement:
Efficient marketing efforts play a curial role in alteration of the demand curve. Investment in
marketing activities increases the awareness of product which reflects in the quantity of the
product demanded in the market. Impact of advertisement on demandis subjected to a selection
of marketing channels and the effectiveness of the market strategy (S, 2019). The increment in
advertisement efforts will assist to attract more consumers and demand graph will shift to the
right side.
Polo mint is a famous product in UK market so the impact of advertisement is limited to the
other factors but the application of efficient marketing efforts will help to attract more consumers
and the same will increase demand of the product.
 Change in consumer preferences;
Alteration in consumer preference is highly relative to the changes in market demand. Taste,
traditions, fashion and marketing forces are some factors which lead to the change in taste of
consumers. For example, a product that is prepared as per the customer taste will be consumed
more by consumers and demandof product will show an incremental trend (Morgan, 2018).
As different Mint products are available in the market, the preference of consumers
ischangingrapidlywhich is affecting the demand of Polo Mint negatively.
 Availability of new products:
Several companies are selling similar products to satisfy the same requirement of consumers so
there is active competition for each product. In this situation, the availability of a new substitute
will attract the consumers and demand of existing product will present declining trend(Toppr,
2019). Impacts of close substitutes are limited to the quality; traditional beliefs of consumers and
prices of new substitutes. Other than Mint products, mouth spray, chewing and more are
available in the market that is affecting the demand of Polo Mint negatively.
 Change in rates of related products:
Alteration in Prices of related goods makes a significant impact on the price of other goods. With
each change in prices of substitutes, shifting behaviour is shown by the market demand of the
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product. For example, tea and coffee are two close substitute products so the change in the price
of one item will lead to the change in demand(S, 2019). With the decline in the price of a
substitute, the demandfor other product will reduce because people will be started the
consumption of substitute product. Similarly, the incremental trend in prices of substitute product
will force the consumers to buy other product which will reflect in the form of increment in
demand. In this situation, the demand curve will shift to the right direction.
 Alteration in the availability of consumers:
There are numerous factors which lead toa reduction in the availability of consumers in the
market. Due to alteration in a number of consumers, the demandfor a product will be reduced
significantly. For example, change in fashion trends, less number of consumers will be available
for the traditional products and the same will work to shift the demand graph to the left side(S,
2019).
Due to increment in health awareness, people are avoiding the consumption of Mint products
because serval harmful impact of continuous usage of Mint products has been identified. Due to
the publication of such results, people are avoiding the consumption of Polo Mint which is
reducing the availability of customers.
Graphicalpresentation of a shift in demand level:
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Factors for Incremental trend in
demand:
 Increment in income and
consumers.
 Positive marketing activities.
 positive change in consumer
preference
 Rise in prices of substitutes.

(Figure: Right side shifting behaviour of the demand curve)
(Source: Toppr, 2018)
(Figure: Left side (Declining) shifting behaviour of the demand curve)
(Source: Toppr, 2018)
From the above graphs, it is understandable that change in demand can be occurred due to
several reasons. The first graph is showing the impact of factors that leadto the increment in
market demand. For instance, marketing is a factor which facilitates the popularity of product
among consumers and leads for increment in demand. Due to increment in demand, more buyers
will be available for one product which will facilitate price increment. Similarly, the second
graph is presenting the shifting of demand graph onthe left side(Toppr, 2019). For instance,
reduction in consumer income will diminish the availability of active market and sales figures
will show a downfall trend which will create pressure to reduce the prices. Prices of substitute
products arethe main factor which may reduce or increase the demand so curve can be shifted to
left or right. If prices of substitute products are snowballing, the demandforthe product will
increase whereas each decline in prices of a substitute will enable decline in product demand
(Rafieisakhaei, et. al., 2015).
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Factors liable for declining
trend in demand:
 Negative change in
consumer preference.
 Decline in prices of
substitutes.
 Income drops

Factors which lead to the shift in the supply curve of a product:
Supply of a product can be affected byseveraltypes of factors in which some are controllable for
the business and some remains uncontrollable. A descriptive explanation of such factors is
provided below:
Decline in costs;
Change in production cost a product plays a direct role in alteration of supply level. With the
change in cost that may arise due to a decline in wages rates or material cost, supply will show
an integrated behaviour. For example, when the cost of production declines, the supplier will try
to supply more units in the market so that maximum profit can be gained (Nitisha, 2019).
Similarly, the supplier will try to control the supply of goods when an enhancing trend has been
identified in production cost.
If prices of raw items that are required to produce Polo Mint decreases, cost of the finalproduct
will decline and the same will create chances of extra profits which will motivate the supplier to
improve the supply stage of Polo Mint.
Climate conditions:
In respect of seasonal products, climatic conditions behave like a controller of supply. For
example, the Supply of agriculture products demands on the monsoon conditions. A good
condition of monsoon will facilitate huge production of agriculture products which will upsurge
the supply (Agarwal, 2019). At the same time, bad weather conditions will reduce the production
so the supplycurve will be affectednegatively.
Impact of climate changes on the supply of Polo Mint is not determinable because the
ingredients of the Polo Mint are totally different from seasonal products.
Technological innovations;
A new advancement in technology is taking place rapidly which are supporting human life in
numerous ways. Through the development of new technology, more specific itemscan be
produced in large numbers which work for the increment in supply. At the same time,
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technology distraction will reduce the production output in a negative way and the same will
reflect in the left side shifting of the supplycurve (Chand, 2019).
Innovation in production technology of Polo Mint will enhance the quantity of final output which
will force the suppliers to increase supply in the marketso that excessive production can be
adjusted.
Impact of related products;
Impact of related products on supply depends on the nature of products. For, example,
enhancement in prices of rice will motivate the farmers to grow more rice which will reduce the
production ofwheat. At the same time, the increase in the price of meat will increase the supply
of leather because leather is abought product of meat production(Agarwal, 2017).
Governmental regulations:
The implications of the government policy on the supply system are understood through this
concept that rebate provided by the government supports the supply level, but with the control-
oriented action from the government officials, the supply phase will be reduced. For example,
due to the declining tax rate, the final cost of the product will be reduced and the supply will
increase(Nitisha, 2019). At the same time, imposing quality-based restrictions will demand the
production of a more specific product, which will reduce the amount of production and
ultimately reduce the supply.
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Market Price of product:
A direct relationship has been identified in the level of supply and product prices. If the demand
remains constant, the increase in the prices of the product leads to an increase in the quantity of
supply, while the reduction in prices forces the suppliers to establish a temporary control over the
quantity of supply. Expected changes in prices also have a significant impact on current supply
levels.For instance, if the increment in prices is expected in future, it will motivate the suppliers
to reduce the current supply so that more profits can be gained in future(Agarwal, 2017).
(Figure: Left side shifting behaviour of supplier curve)
(Source: Toppr, 2018)
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Factor that reduces the supply:
 Price dropout
 Reduction in supplier firms.
 Increment in tax rate.
 Technology distraction

(Figure: Right side (incremental) shifting behaviour of supplier curve)
(Source: Toppr, 2018)
From the graph presented above, it has been underlined that the supply of the product affected by
several micro and macro factors. From the first graph, it is recognized that the fall in prices and
the number of suppliers are major factors that work to reduce the supply of items. It should be
assumed that continuous reduction in supply has a high negative impact on the sustainability of
the business(Nitisha, 2019). It affects consumers' access and creates a risk of market loss. The
increment in product prices and development of technology are some factors which work for the
improvement in supply stage. As continuous improvement supply leads for the reduction in
prices, an optimum balance should be created to make the business most beneficial.
Impact of changes in demand and supply on product prices;
 Changes in product price are accountable with product demand so each ups and downs of
demand come with a considerable impact on the prices. If the demandfor products of polo
mint increases, it will lead to the increment in prices.
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Factor that enhances the supply:
 Price increment.
 Increment in number of
suppliers.
 government subsidy
 Technology innovations