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In the News
10 October 2003
Demand and Diets:
Many students often look quizzically at teachers who point out rather obscure relationships between changes in people's behaviour and levels of demand. It is sometimes hard to appreciate the extent of the link - the reaction is 'I wouldn't do that so how come it seems to have such an effect?' One example of how changing tastes. Fashions and lifestyles can feed through to demand is the Atkins diet. This is a nutritional programme developed by Dr Robert C Atkins of the United States that focuses on reducing the intake of carbohydrates leading to weight loss as the body burns less carbohydrate and therefore more fat. The diet is extremely popular in the US and is catching on quick here in the UK.
The success of the diet is affecting demand in a variety of ways. Tesco have reported a decline in sales of potatoes by 10%; Marks and Spencer have seen a decline in sales of a range of convenience foods - many of which are pasta based. Both potatoes and pasta are high in carbohydrates. Furthermore, Tesco are contemplating bringing out a range of products targeted at Atkins consumers - a new market segment? McDonalds have also faced changing consumer needs by offering burgers without the bun - bread is another product that is avoided in the Atkins regime!
Eggs, however, are an important part of the diet and sales have risen by around 4% on daily egg consumption of around 30 million! (Source of Data http://www.britegg.co.uk/beissection/beis_markdt.html). It is clear from this example that producers are facing constant changes to the composition and nature of their markets.
A misconception amongst students is that producers somehow control demand, they may be able to try to influence it through advertising but ultimately supply and demand are independent. In theory it is the price mechanism that will change both consumer and producer behaviour, in reality it may be that producers take into account a variety of pieces of information in planning production levels but ultimately they will recognise when things are not selling and that is a sign that, for some reason, consumer behaviour has changed!
Look out for the in depth look at demand and supply coming soon on Biz/ed - an interactive opportunity to see how markets work!
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