Supply and Demand

When analyzing supply and demand economics of Verizon Wireless, it is not strictly confined to the elements of cellular devices and the components associated with their construction. While the market factors associated with supply and demand of consumer products affects the indices, many controlled elements are not directly associated with standard supply and demand economics. It can be determined that many factors are intentional in design and exercised to drive market conditions and demand. In examination of this concept, we will look at corporate driven marketing principles that drive supply and demand policies, co-dependent predecessor components of cellular phone providers, and analysis of actual supply and demand manipulations to control demand derivatives.

First, we will look at how actual market supply and demand elements control corporate policy and general product availability. In July, 2011, Verizon Wireless removed the unlimited data plan from its product offering and replaced it with a tiered pricing approach. You could see it as a simple supply and demand issue. The use of data by smartphone users has grown 89 percent, from 230 megabytes (MB) in the first quarter of 2010 to 435 MB in the first quarter of 2011, according to a Nielsen study. Unfortunately, the supply side or network is not growing at that same rate due to the capital required to expand. Thus, tiers put the onus on consumers to either use less data or pay more for the data they use or ideally both. ”A study by Validas, a company that analyses its customers’ bills to match them with an efficient phone plan, said that the up charge on Verizon smartphone users was steep. Under the current plan, Verizon’s unlimited data plan is $30. Under the new tiered service, the lowest priced plan, 2GB per month, will be $30. Other tiers will be 5GB for $50 and 10GB for $80. Overage is $10 per 1 GB (Furchgott, 2011)”. Therefore, actual supply in network bandwidth controlled product offerings at Verizon Wireless.

Furchgott went on to say “Validas said it studied 11,000 Verizon Wireless bills that had been submitted for analysis and found that 96 percent of Verizon smartphone users consumed less than the 2GB of the minimum tier each month. In