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Factors that affect demand., : : :, - - Coggle Diagram
Factors that affect demand.
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.
These goods are called normal goods
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 inferior 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
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
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