In this case, Avocados, these are fruits that are very healthy but also extremely bitter yet they have hit high record prices due to high demand and scare supply. As stated, the supply of avocados has decreased from 360,000 trays per week to 100,000 trays per week because of rain.
Similarly, the article[1] states various reasons for increase in demand. There is a boost in demand of avocados due to the marketing and health campaigns. People have also become health conscious. Due to an increase in demand and fall in supply, the prices of avocados increased.
Image 1: Avocado
Due to the marketing strategies and health campaign there has been an increase in demand, however there is a decrease in supply because of rain, indicating an increase in price and decrease in quantity demanded.
During the summer, due to unsuitable weather conditions, the production of fruits is likely to decrease in Australia, which causes them to import avocados from Western Australia and New Zealand[2].
Image 2: sign outside a café
This is an import expenditure, and this transaction is recorded in the current account section of a country’s balance of payment. In this situation, Western Australia and New Zealand’s avocado producers are likely to benefit as the demand for their goods increases. Australian avocados producers incur a fall in revenue, and hence income. Avocados, being a unique fruit and having no close substitutes has a high demand. Also, that they cannot store avocados as they are perishable good, So, changes in price, will not cause an immediate change in the supply of avocados.
Increase in demand for avocados was essentially due to the promotion and marketing done by the Avocado Australian company, when they started using social media to promote avocados, they also created videos that had unique recipes using avocados which was one of the strongest strategy till date[3].
Image 3: Screenshot from one of the recipe’s provided by Avocado Australian company
This shows how important marketing and promotion is in today’s world and the role it plays in order to receive higher profits or demand in this case, even though the prices have increased consumers are willing to pay these high prices in order to satisfy themselves.I feel that any product or service can attain increased demand if the product or service has been marketed in the right way and at the right time.
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[1] Webster, Lara. “Avocado Price Rise Driven by Scarce Supply and Increased Demand.” ABC Rural, Australian Broadcasting Corporation, 19 Jan. 2016, www.abc.net.au/news/rural/2016-01-20/australian-avocado-prices-hit-record-highs/7099046.
[2] Slezak, Michael. “The Great Avocado Shortage of 2016 Looks to Be Toast as Fresh Harvests Ripen.” The Guardian, Guardian News and Media, 13 Feb. 2016, www.theguardian.com/lifeandstyle/2016/feb/14/avocado-prices-about-to-fall-from-their-7-high-to-the-usual-2-or-3.
[3] Maree. “Australian Avocados Marketing Update.” Avocados Australia, www.avocado.org.au/public-articles/australian-avocados-marketing-update-5/.