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Read the completed example before you start to know what your completed analysis should look like. Also, read the rubric associated with this assignment to see how you will be scored.
Rubric Name: Market Analysis
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Criteria Level 3 Level 2 Level 1 Demand Analysis All determinants of demand are sufficiently addressed. Answers are thorough and demonstrate understanding of the determinant upon demand. Most determinants of demand are sufficiently addressed. Answers are mostly complete and demonstrate a correct understanding of the impact of the determinant upon demand. Most determinants of demand are not addressed or are addressed incorrectly Supply Analysis All determinants of supply are sufficiently addressed. Answers are thorough and demonstrate understanding of the determinant upon supply. Most determinants of supply are sufficiently addressed. Answers are mostly complete and demonstrate a correct understanding of the impact of the determinant upon supply. Most determinants of supply are not addressed or are addressed incorrectly Elasticity Analysis All determinants of elasticity are sufficiently addressed. Answers are thorough and demonstrate understanding of the impact of the determinant upon the value of elasticity. Most determinants of elasticity are sufficiently addressed. Answers are mostly complete and demonstrate some understanding of the impact of the determinant upon the value of elasticity. Most determinants of elasticity are not sufficiently addressed. Answers are incomplete or incorrect about impact of the determinant upon the value of elasticity. News Analysis Article selection is complete. Articles are related to items being analyzed in the assignment. Article summary is complete and cogent. The description of how the information in the article is related to the analysis in other parts of the assignment is complete and correct. Article selection is mostly complete. Articles are mostly related to items being analyzed in the assignment. Article summary is mostly complete and mostly cogent. The description of how the information in the article is related to the analysis in other parts of the assignment is mostly complete and mostly correct. Article selection is not complete. Articles are not related to items being analyzed in the assignment. Article summary is not complete and not cogent. The description of how the information in the article is related to the analysis in other parts of the assignment is not complete and / or not correct. Price Prediction The prediction is correct for predicted shifts in supply and demand. The prediction is correct for predicted shifts in supply and demand. The prediction is incorrect for predicted shifts in supply and demand or there is no price prediction. Overall Score Level 3 Level 2 Level 1 |
Market Analysis Template:
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Instructions: |
Answer: |
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Identify a specific good or service that you plan to analyze: |
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Demand |
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Find a newspaper article that you can relate to demand for your product. |
Title: Publication: Date: Link: |
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Summarize the article here. |
Article Summary: |
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Will demand for your product increase or decrease based on the information in your article? Explain |
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Describe how changes in the following could affect the demand for your product. Give Examples where relevant. |
Changes in Consumer Incomes: Changes in Preferences: Changes in the Price of Related Goods (list items that are substitutes and complements): Changes in the number of buyers: Changes in the expected future price of the product: |
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Elasticity |
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Describe how changes in the following could affect the demand for your product. Give Examples where relevant. |
Number of substitutes: Necessities vs. luxury: Time: |
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Based on the determinants of elasticity do you believe the demand for your product is likley to be elastic or inelastic? Explain |
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Supply |
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Find a newspaper article that you can relate to supply for your product. |
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Article Summary: |
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Will supply for your product increase or decrease based on the information in your article? Explain |
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Describe how changes in the following could affect the supply for your product. Give Examples where relevant. |
Prices of Relevant Resources: Technology: Number of Sellers Expectations of Future Price: Taxes, Subsidies or Government Restrictions: |
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Overall Analysis |
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Based on your analysis above do you expect the price of this product to increase or decrease in the future. Explain. |
Market Analysis Completed Example:
Instructions
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Answer
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Identify a specific good or service that you plan to analyze:
Sunscreen
Demand
Find a newspaper article that you can relate to demand for your product.
Title:
There’s a New Sunscreen That Helps Your Body Produce Vitamin D
Publication:
Business Insider
Date:
10/9/2014
Link:
http://www.businessinsider.com/new-sunscreen-stimulates-vitamin-d-2014-10
Summarize the article here.
Summary:
Vitamin D deficiency is increasing becoming a medical problem and contributes to many diseases including cancer. Vitamin D deficiency is increasing due to changes in diet and the use of sunscreen to prevent skin cancer. Scientists have developed a new formulation of sunscreen that can prevent harmful UVA rays and allow beneficial UVB rays that aid in the natural creation of Vitamin D. Sunscreen on the market currently blocks all of the sun rays. Scientists expect this new formulation of sunscreen to be available soon.
Will demand for your product increase or decrease based on the information in your article? Explain
Analysis:
Once this new sunscreen is available it will be considered a superior substitute to the existing types of sunscreen available. Some people who currently do not use sunscreen due to concerns about not getting enough Vitamin D will be able to use sunscreen to cut the risk of skin cancer. Overall preference for sunscreen use will increase causing demand to increase.
Describe how changes in the following could affect the demand for your product. Give Examples where relevant.
Changes in Consumer Incomes:
If your income increases you may purchase extra bottles of sunscreen to keep in your car or other convenient locations. I believe that when income increases people buy more sunscreen and therefore it is a normal good.
Changes in Preferences:
If preferences for sunscreen increase then the demand for sunscreen will increase. The use of sunscreen has become more widespread as information about skin cancer and the importance of sunscreen use is advertised more.
Changes in the Price of Related Goods (list items that are substitutes and complements):
The demand for sunscreen can be affected by the price of substitute goods and complement goods. If substitute goods become cheaper the demand for sunscreen will fall and vice versa. If the price of a complement good increases the demand for sunscreen will rise. Substitutes for sunscreen might include UVA proof clothing, sun hats and umbrellas, shade. Complements could include post sun skin cooling lotion, swim suits, beach towels, etc.
Changes in the number of buyers:
If the number of buyers increases the demand for sunscreen will increase and vice versa. I believe that the number of buyers of sunscreen will increase as new studies show that even people who previously were thought to be impervious to the damaging effects of the sun can get skin cancer. Also, changes in the weather due to climate change has increased sun exposure in parts of the country and possibly lengthened summers.
Changes in the expected future price of the product:
If consumers of sunscreen expect that more people will be buying sunscreen in the future they will also expect the price to increase and choose to purchase more sunscreen today as a hedge against the future higher expected price. This will cause demand for sunscreen today to increase.
However, since we are going into the winter season they may expect the price of sunscreen to fall and demand for sunscreen today will fall as they wait for sale prices over the winter.
Elasticity
Describe how changes in the following could affect the demand for your product. Give Examples where relevant.
Number of substitutes:
The more substitutes that a product has the more elastic demand will be. While sunscreen does have some substitutes such as UVA protected clothing and staying in the shade these are not very good substitutes; most people are not likely to adopt them unless sunscreen became very expensive. This determinant makes demand seem less elastic.
Necessities vs. luxury
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Is sunscreen a necessity or a luxury? Without data to calculate and income elasticity of demand it is hard to know. However, it seems to be more of a necessity in certain parts of the world. For example, Australia has high rates of skin cancer and lots of sun. For the U.S. I believe most people consider sunscreen to be somewhat of a necessity also. Therefore, this determinant of demand also makes demand less elastic.
Time
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The more time consumers have to seek out substitutes the less elastic demand will be. People consume most sunscreen in the summer months. Since this is a short period of time demand will be less elastic over the summer. However in the long run people might decide to purchase a wardrobe of UVA protective clothing or plan vacations to shady places instead of buying sunscreen. It would take a lot of time to develop those substitutes so this determinant of demand makes demand for sunscreen less elastic.
Based on the determinants of elasticty do you believe the demand for your product is likley to be elastic or inelastic? Explain
Based on all of the determinants of price elasticity of demand I conclude that the demand for sunscreen is likely to be inelastic or have a value E < 1.
Supply
Find a newspaper article that you can relate to demand for your product.
Title: Zinc Prices Surge as Supplies Shrink
Publication:
The Wall Street Journal
Date:
6/22/2004
Link:
http://online.wsj.com/articles/zinc-prices-surge-as-supplies-shrink-1403474976
Summarize the article here.
Article
Summary:
Canada and Australia are closing mines that are the source of huge part of the global supply of zinc. New zinc mines are not opening as quickly as these planned closures are taking place therefore, the global supply of zinc is falling. Simultaneously the global demand for zinc is increasing. This is causing sharp price increases of zinc. Zinc is used in the production of steel, anti-rust products and zinc oxide is used in the production of sunscreen.
Will supply for your product increase or decrease based on the information in your article? Explain
Analysis: Because zinc oxide is a common ingredient in most sunscreens the increase in the price of zinc will cause the supply of sunscreen to decrease.
Describe how changes in the following could affect the supply for your product. Give Examples where relevant.
Prices of Relevant Resources:
When the price of inputs used in the production of a good or service increases the supply of that good or service decreases and vice versa. The price of some of the ingredients in sunscreen (zinc oxide) are sharply increasing according to the information in my article. This will put downward pressure on the supply of sunscreen
Technology:
When technology makes it possible to produce a good or service more cheaply supply will increase. New methods for producing sunscreen found through scientific developments that enables people to wear sunscreen and process vitamin D at the same time (1st newspaper article) will put upward pressure on the supply of sunscreen.
Number of Sellers
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If the number of sellers increases then supply will also increase. I expect that the number of sellers of sunscreen will increase as new firms innovate new types of sunscreen based on the new scientific information and reduction in government restrictions. This will put an upward pressure on supply of sunscreen.
Expectations of Future Price:
Producers of sunscreen probably expect the future price of sunscreen to increase as demand is predicted to increase due to a change in consumer preferences and climate change. Therefore, supply today will decrease in response to the expected increase in future prices.
Taxes,
Subsidies
or Government Restrictions
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No changes in taxes or subsidies are expected and so no influence on supply from this determinant.
Overall Analysis
Based on your analysis above do you expect the price of this product to increase or decrease in the future. Explain.
According to my analysis above demand for sunscreen is likely to increase while supply stays the same or decreases slightly. Demand for sunscreen is likely to be inelastic and have a steep demand curve. When demand increases and supply decreases the price of sunscreen will rise. People may consume consume more sunscreen if the demand increase outweighs the supply decrease but at higher prices.
