Demand And Supply In Marketing

Everything in this world can be explained and summarised with the economic terms of 'demand' and 'supply'.

Negotiation between 2 or more parties are governed by these 2 terms.

It is the same in business as well. For example, if you (a hungry person) were to walk into a food court/mall which has a variety of food stalls selling delicious food, you will have the upper hand because supply exceeds your demand for food. You can afford to stroll around the food court/mall and take your own sweet time to choose what you want to eat. You can compare the prices and the appearance of the food or other factors important to you. To put it simply, you have the negotiation power.

On the other hand, if you (a hungry person) were to walk into a food court/mall which has only 1 food stall. This time round, the food stall owner will have the upper hand. You cannot afford to pick and choose as supply is limited and your demand for food exceeds supply vis-a-vis the first scenario. The food stall owner will, in most instances, not have the time to smile so much and greet you, he will be busy attending to other customers and it is up to yourself to queue up and obediently follow his rules, ie he can choose to give you a small food portion or he can choose to serve you slowly and take his time. To put it simply, the sole food stall owner has the negotiation power.