Deliverables and project management frameworks

¶ … Television Set Demand Analysis

The electronics market in the U.S. seems to have surpassed the financial crisis, and the television set category makes no exception. The estimated demand growth trend will continue, as it is expected that the television set market will reach $27 billion by 2010, compared with $25 billion in 2006 (Business Economics, 2007).

The reason behind this significant market increase relies on the fact that demand will focus more on the flat-panel television set. The demand for this product is expected to experience a 65% increase between 2006 and 2010.

Price elasticity of demand. Any household owns at least one television set. There are numerous types of TV sets, given their different sizes, brands, included options, quality, or technology used. Their prices vary in accordance with their characteristics, from cheaper TV sets that almost anyone can afford, to very expensive ones that use advanced technology. Therefore, it is not that easy to agree upon a clear conclusion regarding the price elasticity of demand regarding TV sets.

However, it has been observed that when TV sets' prices decrease, the demand for this type of product increases. But the price increases for each type of TV set are not significant enough to determine significant changes in the demand in the case of each TV set category.

Income elasticity of demand. If a household's or an individual's income increases at some point it is expected to direct the increase in purchasing better electronics, including TV sets. Individuals' income increase determines an increase in the living standards. Better earning individuals will want to experience and to show a better lifestyle. This includes electronics in general, and TV sets in particular.

Substitutes for the product. The services provided by TV sets as the mean of expression of television, does not allow for many substitutes to threaten the position of TV sets in the mind of consumers. The most important and complex substitute is the computer. Given the fact that many TV stations can be viewed online, TV series and movies can be downloaded and watched on the computer, this product provides a serious alternative to TV sets.

This is especially applied to individuals that cannot find any similarities between their preferences and the products or services delivered by televisions. They prefer to be in charge of the programs they view and to select only the matters of interest to them. Although this does not directly refer to TV sets from a technical point-of-view.

Another substitute product for the TV set, but a remote one, can be represented by the mobile phone. This substitute refers to individuals that view the TV set as a mean of information rather than entertainment. These consumers can find the latest news on their mobile phone that can provide such services in places or times when TV sets are out of reach.

Complements for the product. The most important complementary product for TV sets is represented by the Home Theater System. The demand for such products is increasing. The increase is also due to a diversity of suppliers, which led to reduced prices.

Another product that can be considered TV set's complement is the VCR, or the DVR, its modern and more searched for version. Just like in the case of TV sets, the DVR comes in a very wide range, there are numerous suppliers fir this product, the prices vary in accordance with the quality and degree of technology advance. The demand for this product has a similar evolution as the demand for TV sets. However, the demand for DVRs is smaller than that for TV sets.

Given the circumstances presented above, one may conclude that the demand for TV sets is an inelastic one. The characteristics that generate this situation are: the reduced availability of substitutes, the necessity for this product, and its importance.

As mentioned above, the computer is the only major substitute for the TV. And this does not even apply to the majority of consumers. People will always buy Tvs, and most households will own at least one TV, since it is quite unlikely that a significant substitute will enter the market.

Regarding the importance of the TV in the consumer's income, the price spent for this item is not an extremely significant one, given the fact that such products are not bought frequently by the same consumer.

The necessity for buying a TV set is a very important one for most consumers. In this case, the consumer has no willingness to postpone the purchase. Also, the purchase cannot be postponed for a very long period of time.

The supply for this type of product is a diversified one. There are several producers. There are numerous types of TV sets. Any consumer can be satisfied by at least one of the offered products, in terms of price or of technical requirements. It is not expected that significant changes will be produced in the demand and supply for TV sets.