Demand for Firm’s Product and Industry’s Products
The quantity of a firm’s yield, that can be disposed of at a given price over a period refers to the demand for firm’s product. The aggregate demand for the product of all firms of an industry is known as the market-demand or demand for industry’s product. This distinction between the two kinds of demand is not of much use in a highly competitive market since it merely signifies the distinction between a sum and its parts. However, where market structure is oligopolistic, a distinction between the demand for firm’s product and industry’s product is useful from managerial point of view. The product of each firm is so differentiated from the products of the rival firms that consumers treat each product different from the other. This gives firms an opportunity to plan the price of a product, advertise it in order to capture a larger market share thereby to enhance profits. For instance, market of cars, radios, TV sets, refrigerators, scooters, toilet soaps and toothpaste, all belong to this category of markets.
In case of monopoly and perfect competition, the distinction between demand for a firm’s product and industry’s product is not of much use from managerial point of view. In case of monopoly, industry is one-firm industry and the demand for firm’s product is the same as that of the industry. In case of perfect competition, products of all firms of the industry are homogeneous and price for each firm is determined by industry. Firms have little opportunity to plan the prices permissible under local conditions and advertisement by a firm becomes effective for the whole industry. Therefore, conceptual distinction between demand for firm’s product and industry’s product is not much use in business decisions making.