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Producer Expectations

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amanda duffy

on 4 May 2010

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Transcript of Producer Expectations

What is Producer Expectations? Suppliers make current
productions decisions based on their expected future income.

Expect theUnexpected The effect of expectations on supply are difficult to predict. Expecations at many times, can be higher or lower from the initial prediction as oppose to how the product actually sells. New coke?
YUCK! In 1985, Coca-Cola reformulated their highly popular soft drink, Coke. Expecting the new product to sell exceedingly well, the product unfortunately bombed and America's tastebuds did not have a liking for it. Due to the decrease in purchases of Coca-Cola, their competition Pepsi was doing quite well considering no one was purchasing the "new coke". This factor proved to be highly beneficial for Pepsi's sales. The suppliers ( Coca-Cola co.) initially anticipated a great increase in sales of their product which obviously proved to go in another direction causing their expectations to not be fulfilled. Roses are red, violets are blue
Candy is sweet BUT money is too! Producer's expectations for the most recent passed V-days was incredibly high. Considering 09' allowed chocolate and candy sales to reach an estimated $928 million, the producers of candy supplying companies estimated the sales to rise 0.8% due to the economies somewhat better financial situation in comparison to the previous Valentine's day. This estimate left them having a general guesstimation that chocolate and candy sales would climb to $935 million. Having this expecation, producers produced more product so that the supply and demand dynamic would have a proper balance. As they predicted and expected chocolate and candy sales to rise this past year, this caused a great increase in supply.
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