How Businesses Reacted to Changes in Consumer Behavior
Assignment Overview
Consumer Decision-Making
In the same way that you have been affected by marketing since you first asked an adult for a toy or food seen on a commercial, you have also used tenets of economics in making decisions.
Case 2 Resources
Changes to consumer expenditures during the COVID-19 pandemic (2022)
Which Economic Factors Most Affect the Demand for Consumer Goods? (2022)
How US consumers are feeling, shopping, and spending—and what it means for companies (2022)
Consumer Price Index (CPI) (2022)
CPI Inflation Calculator
Consumer Price Index
Case Assignment
Buyer Behavior and Effects of the Economy
The Course Data File contains the Product for this assignment.
Research the product from an economic standpoint (include supply and demand, cost). Describe what has been happening in the product market over the last year or two. Find a balance between explanations, data, and statistics provided. You must decide what information should be included in this section. This section must be 1 page in length. (Research Required)
Next, discuss trends in the CPI during the same period. Analyze underlying reasons for changes in the overall Consumer Price Index and how inflation, income, unemployment, or other economic events are affecting the numbers overall and in the product category. This section must be 1½ pages in length. (Research Required)
Following up on what you learned last module, how is consumer behavior changing concerning the product discussed? What other products would be impacted by consumers’ economic decisions? This section must be 1 page in length. (Research Required)
As a conclusion, analyze how businesses reacted to changes in consumer behavior. Explain it is using economic terminology. (Research Required). This section will be 1/2 page in length.
Case 2 Assignment Guidance Files
BUS530 Case 2 Assignment Video Guidance BUS530 Case 2 Assignment Guide
No quotations are permitted in this paper. Since you are engaging in research, be sure to cite and reference the sources in APA format. NOTE: failure to use research with accompanying citations to support content will result in reduced scoring “Level 2-Developing” across the grading rubric. This is a professional paper; not a personal one based on feelings. It must be written in the third person; this means words like “I”, “we”, and “you” are not appropriate.
Assignment Expectations
Use the attached APA-formatted template (BUS530 Case2) to create your submission.
The template is set up in APA 7: double-spacing, font, margins, headings, page breaks, APA help links.
BUS530 Case 2
Your Name
Trident University International
BUS530 Managerial Economics
Due Date
BUS530 Case 2
Orange juice is among the most consumed non-alcoholic beverages around the world. However, its demand and supply have fluctuated, especially during the COVID-19 pandemic affecting Consumer Price Index (CPI).
Buyer Behavior
Orange juice is obtained from squeezing and processing juice from the orange fruit. The market for orange juice fluctuates depending on the seasonal performance of orange fruits. In 2023, orange juice's revenue amounted to 33.30 billion USD. By 2027, the orange juice market is projected to grow by 2.36% annually (Statista, 2023). The United States contributed the most to the global revenue compared to other major producers of orange juice. The supply of orange juice has declined in the past two years due to diminishing output from Florida and Brazil, which are the main growers of the orange tree. In turn, the reduced supply of the product has increased the prices. However, the supply is expected to normalize this year as Brazil has invested in recovering and restoring its initial production of orange fruits. The weather conditions are also expected to be favorable in the 2022/2023 season for Brazil, thus the certainty in improving the projected orange fruit production in Brazil.
Mexico helps bridge the supply deficit. The country has recovered its production of juice this year. However, this is also expected to decline because the orange juice market needs 200000 tons only in the coming years, and overproduction may lead to a surplus supply that may go to waste (Roshan, 2923). The production from Florida is still declining and thus does not help solve the current decline in product supply.
The demand for orange juice increased during the COVID-19 pandemic, subsequently increasing the product's prices. This followed a campaign on the importance of fruits and orange juices in helping the body stay healthy and tackle the effects of COVID-19 if one contracts it (Kumar & Babu, 2021). Nonetheless, this surge in demand was temporary; it dropped soon as the demand for orange juice reduced in developed markets.
Additionally, the production cost of orange juice is expected to rise in the coming years due to the changing and unpredictable weather patterns in orange juice-producing countries. These changing weather patterns make orange juice production unpredictable (Roshan, 2923). This uncertainty affects the equilibrium; thus, the product's sale is likely to fluctuate because of the constant price changes. The consumption of the product is also weakening because of the emergence of substitute products at affordable prices.
Consumer Price Index
The Consumer Price Index (CPI) of orange juice has fluctuated in the last two years because of the changing demand and supply forces. The production cost increased due to a reduced supply of raw materials, increased energy costs and increased prices (Fernando, 2023). The COVID-19 pandemic affected the supply of raw materials and even the final product from farmers and processors because of the restrictions on movements from place to place. Oranges go bad quickly if not refrigerated; thus, most suppliers reduced the quantity while processors received minimal orange juice for processing—the weather in most orange-producing countries like China, Brazil, and Mexico. The electricity cost also increased because of the dry weather conditions that increased electricity production costs. Therefore, the prices of orange juice increased to take advantage of the scarcity of the product.
Several underlying reasons exist for the changes in the overall Consumer Price Index (CPI). These include changes in supply and demand, production costs, weather events, government policies and market competition.
The changes in demand and supply forces affected the CPI of orange juice. The onset of the COVID-19 pandemic led to increased demand for the product. The nutrients benefit of the product led to an increase in its consumption. None alcoholic people also would drink juice while staying or working from home. The increase in demand also increased its supply, and the price subsequently increased. This raised the CPI of the product (Fernando, 2023). In cases where the demand decreases, the supply will decrease as production scales down to avoid wastage due to reduced consumption.
The production cost also affects the PPI of orange juice. Production costs have increased in the past two years, leading to a change in CPI. The supply of orange juice was reduced due to weather changes. The energy costs increased production because energy is a crucial input in orange juice production (Maverick, 2022). Transportation costs also rose due to an increase in energy costs. This further increased the production costs because of the increased expenditure in transporting the raw materials to the processing plants and the finished product to the market. Thus, the production costs affected the PPI of orange juice for ...