Determinants of demand in economics

Determinants of Demand -- the Case of the Re-Positioned Pop/Power Tarts

Price is one of the first, most important variables to consider when conducting a demand analysis. When one is aiming to construct an appropriate marketing strategy, item price is a controllable factor that influences demand, unlike the price of one's competitors. At present, Power Tarts cost less than Jiffy Wiffy Pop Tarts. When comparing two goods that can be substituted, in terms of controlled demand variables, consumers will almost always opt for the less pricey alternative, especially with a non-durable, non-luxury food items like breakfast foods.

The Jiffy Wiffy Company may be able to cash in on greater consumer loyalty, but not indefinitely, if Power Tarts gain a solid reputation as a superior product. This is true regardless of the average income of consumers in the domestic market, as even a wealthy customer might want to save money on something like a cheaper Pop Tart. At present, Jiffy Wiffy has a market edge, with the uncontrollable exit of Kellogg's from the market, and the lack of competitor toaster breakfast pastry of such a wide variety of flavors. (Purity Food's toaster tarts only have one or two varieties of flavor, to make just one example. But in terms of the perceived quality, Power Tarts are more nutritious than Pop Tarts and better tasting than Power Bars.

Still, they are probably at very least, less fun to eat than Jiffy Wiffy's product. Thus, given that the major competitor Kellogg has opted out, the market has grown less competitive, but a price hike would be unwise. Still can price be cut, given that the only other remaining variable to manipulate against the power of the Power Tarts is the number of dollars spent on advertising? To retain their market hold, Greg and Dem can attempt to outspend the emerging Power Tart competitors on media exposure, but if they do so, they will not be able to lower the price of their product, even though they may enhance the perceived quality of their items. Thus, distinguishing the unique characteristics of the two items seems like the best option, creating a more targeted marketing strategy that will not at least necessitate a price hike.

When examining uncontrollable variables, it seems best to market the new tarts to a completely different demographic than Power Tarts. True, the Power Tarts are more nutritious -- but how many eight-year-old tart consuming customers are concerned about their fiber and Vitamin E intake? Also, toastable tarts contain more of a 'cooked breakfast' aura for busy moms than a nutrition bar. Label savvy, highly educated consumers looking for a quick pick me up between work and the gym may seek Power Tarts. But if Jiffy Wiffy Tarts look like Power Rangers or better yet Sponge Bob Square pants, what do you think kids will go for? Power Bars markets itself on its website as the leader in sports nutrition, while Pop Tarts marketed itself with promotional games -- it seems wise to follow Kellogg's former lead in market segmentation, and deploy advertising to make use of consumer tastes in the kid market.

With a sufficiently 'fun' marketing strategy, the nutrition enhanced factor of the Power Tarts appeal could be overcome, even though gym-going twentysomethings wishing to reconnect with their youth may go for the modified better tasting form of Power Bars. The 'fun' factor could also be a potentially leveraging factor abroad, as consumers buy into the American nature of the product's appeal, and nutrition may be again, less of a concern in foreign customers seeking specifically American food like convenience breakfast pastry.