Short-term and Long-term Demand

Short-term and Long-term Demand

Short-term demand refers to the demand for goods that are demand over a short period. In this category fall mostly the fashion consumer goods, goods of seasonal use and inferior substitutes during the scarcity period of superior goods. For instance, the demand for fashion wears is short-term demand though the demand for the generic goods such as trousers, shoes and ties continues to remain a long-­term demand. Similarly, demand for umbrella, raincoats, gumboots, cold drinks and ice creams is of seasonal nature; ‘The demand for such goods lasts till the season lasts. Some goods of this category are demanded for a very short period, i.e., 1-2 week, for example, new greeting cards, candles and crackers on occasion of diwali.

Although some goods are used only seasonally but are durable in nature, e.g., electric fans, woollen garments, etc. The demand for such goods is of also durable in nature but it is subject to seasonal fluctuations. Sometimes, demand for certain goods suddenly increases because of scarcity of their superior substitutes. For examp1e, when supply of cooking gas suddenly decreases, demand for kerosene, cooking coal and charcoal increases. In such cases, additional demand is of short-­term nature. The long-term demand, on the hand, refers to the demand, which exists over a long-period. The change in long-term demand is visible only after a long period. Most generic goods have long-term demand. For example, demand for consumer and producer goods, durable and non-durable goods, is long-term demand, though their different varieties or brands may have only short-term demand. Short-term demand depends, by and large, on the price of commodities, price of their substitutes, current disposable income of the consumer, their ability to adjust their consumption pattern and their susceptibility to advertisement of a new product. The long-term demand depends on the long-term income trends, availability of better substitutes, sales promotion, and consumer credit facility. The short-term and long-term concepts of demand are useful in designing new products for established producers, choice of products for the new entrepreneurs, in pricing policy and in determining advertisement expenditure.