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Xeco 212 - Supply and Demand Paper

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. Assignment: Supply and Demand Paper


August 7, 2011

When making the decision to purchase a new car the list of different selections is quite long. The choices are nearly endless. Supply and demand for such a large item gets to be more of a research project than anything. There are many companies from whom to choose as well as many different body styles of vehicles that may or may not suite a person's specific lifestyle and needs. To further complicate things the specific models of cars have multiple package possibilities. From the list of possibilities there are options that are available to add on the automobile even after the purchase. This can be a daunting project to select the appropriate vehicle that would be a suitable means of transportation as well as fit the individual for years to come.

Making an automobile purchase in most cases is the second largest purchase a person will ever make. The manufacturers are well aware that there are multiple choices to make in today's market. Each manufacturer and model will have a similar substitute from other manufacturers. The manufacturers also realize that the sale of an automobile will all but guarantee a service schedule to their repair department for a minimum of three years. This then brings more value to the overall sale of the automobile. The company also knows, to assist a customer in purchasing their product there will be an opportunity to sell extended warranties and protections in the finance office as well. Money can be made at the time of the sale, during the sale as well as after the sale. There is much more to buying and selling a car than simply pointing and paying.

In a market so saturated with choices a manufacturer must be in tune with its potential customers to maintain its share of the market. As a business the manufacturer must balance the needs, wants, desires as well as price point of potential customers to maintain its share of market sales. If the manufacturer installed all of the desired features on every automobile the price could be higher than the market would bear. The manufacturers then after much market research assemble a reasonable about of features that meat specific price point requirements set by the market and market area. However there are things that such manufacturers cannot control but yet must still be prepared for.

An example of this type of situation would be the market crash in the United States 2008. This crash was reported by Money-Zine magazine by saying "Although history may state the actual market crash occurred on Monday, October 6, 2008, the market experienced eight consecutive trading days of negative movement starting on October 1, 2008" There had been little planning by



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