Question

Draw a graphs/chart divided into different location and availability of the customer demand in regard to online kitchen appliances. Each and every region would be divided into separate slide and the total customer buying behaviour as well as the payment capacity and competitors would also be available on the same graphs/chart.

Answer 1

To understand the availability of consumer demand regarding online kitchen appliances, according to the geography, we need to keep in mind the below:

1. The requirement of online kitchen appliances;

2. Income patterns;

3. Ease of access and delivery of online kitchen appliances;

4. Availability of competitors in the market.

Keeping the above in mind, it is easy to reason that online kitchen appliances will be in great demand in developed and developing nations due to the availability of disposable income, need for such conveniences, the trend of such conveniences. Kitchen appliances, we must understand, will be in great demand from such households where the women are not just home-makers but are either working in paid jobs or actively engaged in other activities outside the home such as social work, community activities etc. For such women, kitchen appliances will be in demand to reduce the time taken in the kitchen and free up much time for other work. In addition, there needs to be a good connectivity to the internet.

Therefore, we can safely assume that countries in North America, Europe, most parts of Asia and South America, ANZ region will have a high consumer demand for online kitchen appliances. Countries in Africa, Central Asia, Central America are expected to have low or no demand for such goods. Low income, women pursuing traditional kitchen duties, low net connection, poor transport facilities and regional connection.

In terms of payment capacity, the countries of North America, Western Europe, emerging markets in Asia and South America, ANZ region will have higher disposable incomes to able to afford kitchen appliances. These countries also coincidentally have good internet connectivity to allow people to purchase the commodities online, have good transport and communication facilities to allow the delivery of goods, though these would depend from country-to-country, region-to-region.

In terms of competitors, since most of the kitchen appliances are produced by developed nations, we expect more competitors in such markets, simply because people living in these countries will also have access to local, small competitors, who have the economies of scale to supply locally but not globally.

Now, we come to the graphical explanations.

Starting with North America and Western Europe,

As we can see, the demand is both price-elastic and income-elastic. Consumers in such countries have the option either to go to a store and purchase kitchen appliances or purchase online. Supply is also elastic due to the availability of major and local producers. So, companies have to offer competitive prices as well as delivery charges to encourage consumers to purchase online.

Emerging markets of Asia, Eastern Europe, and South America

As we see from the graph above, the online demand for kitchen appliances is relatively less price and income elastic than that for North America and Western Europe. This is due to the fact that emerging markets like to follow the trend of consumption pattern set by the developed nations of the west. Income distribution in emerging markets is more unequal than that in developed nations. Those consumers with high disposable incomes will have a high demand for online kitchen appliances. Higher incomes allow such consumers to access branded kitchen appliances. For low disposable income groups, less disposable income combined with possibly not easy access to internet services means they will rely more on local suppliers. From the supply side, we see the supply curve of online kitchen appliances is less elastic compared to the supply curve of similar goods in North American and European markets. Not all producers of online kitchen appliances will be able to supply to the emerging markets. There will be few who can and these will mostly be global brands as they have the economies of scale to supply globally. In emerging markets, there will less number of competitors and therefore the supply curve is less elastic. So, the equilibrium price of online kitchen appliances will be higher in these countries for the same quantity consumed compared to the developed nations of the west.

Low-Income Countries of Africa, Central America, and Central Asia (and Australasia like Polynesian and Melanesian islands)

Where purchasing kitchen appliances online is becoming more and more of a necessity in developed markets and emerging markets, it is still a luxury in the under-developed nations of Africa, Central America, and Central Asia. Most of the women in such countries are still homeworkers and prefer using traditional methods of cooking. They have very low or no demand for such appliances. It is only women of the few relatively higher income economies of Mexico, Botswana, South Africa, Ukraine etc who will want to purchase kitchen appliances online. The reasons to join the trend of rich people who purchase global brands. Their demand for local brands would be low. As far as supply is concerned, local suppliers of kitchen appliances will be very low. International suppliers will have restricted supply access to these countries depending on ease of access and availability of local branches in such countries. Therefore, both demand and supply curves will be relatively inelastic compared to the top 2 graphs. Consumers in such countries will have to pay an even higher price for the same amount of goods demanded.

Finally, we come to the developed nations of Australia and New Zealand.

Consumers in ANZ region have high disposable incomes but due to the geographical location of these nations, the supply of kitchen appliances purchased from overseas companies online will be limited and much more costly than in comparative high disposable income countries of North America and Western Europe (unless such companies have local factories of production). ANZ has limited local producers and suppliers of kitchen appliances. Therefore, consumers mostly depend either on exports or online orders to overseas producers. The supply curve will be relatively priced inelastic and consumers of these nations will also have to pay a price higher than consumers of North American and Western Europe, probably even higher than the emerging nations (most emerging markets are not as geographically separated as ANZ).