Factors that affect demand.

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Product pricing

There is a negative relationship between theprice and demand for product

Consumers tend to want more of a product for lower prices

This is usually referred to as the Law Of Demand

The consumers income

For many goods there is a positive relationship between income and how much a consumer is willing to spend on a good.

When income falls, the demand for products will decrease.

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Cheaper products are now in higher demand than their more expensive counterparts.

A higher income will mean that consumers move to more expensive and high quality products which would cause an inverse relationship between income and demand

These goods are called normal goods

Some changes in income will effect the quality of the product brought.

Normal products and inferior products depend on the person as one persons normal good might be someone else's inferior good

These goods are called inferior goods

The price of related goods

Similarly to income, the amount that a consumer is willing to buy is based on the type of good.

Two goods that are specifically used together are called compliments of each other

This means e.g. that an increase in the price of strawberries will mean a decrease in the price of cream

There is a correlation between the demand of one complimentary good and the price of another

Some goods are seen as substitutes of others e.g. coke and Pepsi

If the price of Coke increases, Pepsi may become a more desirable product

The law of demand states that less people will by Coke as it gets more expensive

When two goods are substituted, there is a positive correlation between the demand of one substitute and the price of another

The tastes and preferences of consumers

Many factors can change a persons tastes and preferences

When a celebrity takes an interest in a product, if people like the celebrity the demand for the product will increase

If laws and legislations/ studies start negatively viewing a product and consumers will not buy it