07-24-2009, 10:15 AM
I don't think supply is defining demand at a "product type" level but I agree it is defining demand at the specific supplier level. ie, Company XYZ sells nails. The demand for nails still drives supply. The difference is that XYC agreement with "Bob's Nails" defines the specific supplier. You demand / need nails, but your need will only be filled by Bob's nails (until XYZ changes vendors at the flip of a hat). The real question is why is XYC choising to fill demand with Bobs Nails? and not someone else.
This begs the question "the chicken and the egg".... Which is really the same question as Supply and demand.
I think that the reason for XYZ to come to an agreement with Bobs Nails (BN) is like you said, the direct shipping and inventory control makes BN the differentiators of the product. The reason that this is the only differentiator, is that of the 20 Nail manufactures, there is no difference in Quality or unit price. Since there is no difference in quality or price, then why carry 5 different brands. The only reason XYZ would carry more options then BN, is if some company came up with a better product that the public DEMANDED, or another company came in with a price point based on direct shipping that would beat BN.
So I think Demand still defines supply. Its just that the choices in many area's have become monogamous. There is little difference between products, there fore why not go with one. Especilly when your customers are not demanding alternative choices.
This plays into the service industry as well as manufacturing. Take my industry, telecommunications. In the the late 80's, after ATT divestiture, LD had huge differentiators in quality. This was because ATT owned the best / sometimes only microwave frequencies. Competitors were using Satellite with some Microwave. So the competitors drive demand by lowering cost of a poor quality product.
Fast forward to the mid 90's and all the competitors including ATT are now using Fiber. Analog is dead. There is zero difference in quality and services / features. The differentiators becomes a price point for delivery of the product and that's it.
I think this is a standard of product evolution. But make no mistake, Demand is still driving supply.
This begs the question "the chicken and the egg".... Which is really the same question as Supply and demand.
I think that the reason for XYZ to come to an agreement with Bobs Nails (BN) is like you said, the direct shipping and inventory control makes BN the differentiators of the product. The reason that this is the only differentiator, is that of the 20 Nail manufactures, there is no difference in Quality or unit price. Since there is no difference in quality or price, then why carry 5 different brands. The only reason XYZ would carry more options then BN, is if some company came up with a better product that the public DEMANDED, or another company came in with a price point based on direct shipping that would beat BN.
So I think Demand still defines supply. Its just that the choices in many area's have become monogamous. There is little difference between products, there fore why not go with one. Especilly when your customers are not demanding alternative choices.
This plays into the service industry as well as manufacturing. Take my industry, telecommunications. In the the late 80's, after ATT divestiture, LD had huge differentiators in quality. This was because ATT owned the best / sometimes only microwave frequencies. Competitors were using Satellite with some Microwave. So the competitors drive demand by lowering cost of a poor quality product.
Fast forward to the mid 90's and all the competitors including ATT are now using Fiber. Analog is dead. There is zero difference in quality and services / features. The differentiators becomes a price point for delivery of the product and that's it.
I think this is a standard of product evolution. But make no mistake, Demand is still driving supply.
Maul, the Bashing Shamie
"If you want to change the world, be that change."
--Gandhi
![[Image: maull2.gif]](http://bengtel.com/maull2.gif)
"If you want to change the world, be that change."
--Gandhi