StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Discuss consumer behavior and how people respond to price changes - Essay Example

Cite this document
Summary
This is the logic of sales in department stores where they will lower the price to encourage consumption and inversely, it is thought that higher prices…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER91.1% of users find it useful
Discuss consumer behavior and how people respond to price changes
Read Text Preview

Extract of sample "Discuss consumer behavior and how people respond to price changes"

Discuss consumer behavior and how people respond to price changes In general, people will tend to consume more when prices fall and will tend to skimp consumption when price pushes upward. This is the logic of sales in department stores where they will lower the price to encourage consumption and inversely, it is thought that higher prices will mean lower sales because consumers will think that they are not getting good value from their money. This is consistent with the basic law of supply and demand in economics where more supply would lower the price and less supply would drive the price up.

But this is not particularly true all the time. There are several conditions where consumers will not tend to consume more even if the price is lowered nor will they tend to consume less if the price is driven up.Price elasticity and inelasticity in demand In general, consumer demand changes depending on the rate of change of prices. As the law of price elasticity dictates, demand is sensitive to price. This however particularly true to regular products that are regularly consumed which are categorized as elastic.

There are several factors that affect price sensitivity or elasticity of a product which affects consumer behavior. First and the most obvious are the products that people can live without are highly elastic and therefore the change in price also affects the price. The most typical examples for these are luxury items such as jewelries where its steep price prohibits many people to acquire and a drop in price significantly increases the demand. The same is true with branded bags or clothing where a sale will almost immediately increase consumption.

Another factor that affects elasticity is the availability of alternative products which affects consumption. Availability of products does not only mean substitute products but also competitors who could offer the same product at a lower price. The classic example of this is our favorite McDonald where it has to be priced low otherwise its customers will either move to its competitors such as Burger King or look for alternative for hamburgers such as taking pizza instead of a burger.There is an instance however that demand will become inelastic or consumer behavior will not change regardless of price.

This is true with inelastic products such as medicine that no matter how much the price is, the rate of purchase or consumer behavior will remain the same. It is because people need to buy medicine when they are sick. They also cannot defer purchase regardless of price and will immediately purchase once the money is available to them because they do not want to remain sick.

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Discuss consumer behavior and how people respond to price changes Essay”, n.d.)
Discuss consumer behavior and how people respond to price changes Essay. Retrieved from https://studentshare.org/macro-microeconomics/1618920-discuss-consumer-behavior-and-how-people-respond-to-price-changes
(Discuss Consumer Behavior and How People Respond to Price Changes Essay)
Discuss Consumer Behavior and How People Respond to Price Changes Essay. https://studentshare.org/macro-microeconomics/1618920-discuss-consumer-behavior-and-how-people-respond-to-price-changes.
“Discuss Consumer Behavior and How People Respond to Price Changes Essay”, n.d. https://studentshare.org/macro-microeconomics/1618920-discuss-consumer-behavior-and-how-people-respond-to-price-changes.
  • Cited: 0 times

CHECK THESE SAMPLES OF Discuss consumer behavior and how people respond to price changes

The Role of the Consumer in Health Care

It is, therefore, important that health care providers respond to these impacts by carrying out a cost study in the market to ensure that the prices charged for the services are affordable to all consumers.... The discussion will be in light of features of consumer behavior in service industry, and how they apply to health care.... ?? Features of Consumer behaviors, how they apply to health care providers and how providers may need to change, to accommodate the “voice of the consumer” Active participation of consumers in heath care has been singled out as one vital element that needs to be incorporated into the health care system....
7 Pages (1750 words) Essay

Cognitive and Behavioral Approach in Creating a Successful Message

In Asia, the potential market such as Indonesia and India are still price conscious and would be willing to invest in products that could satisfy such criterion, but it cannot be denied Apple has become a personal choice even if the price of its offerings was not comparable to other related products in its industry (Arakali and Master, 2012).... However, down deeper in understanding what are the things going on prior to a certain behavior, some experts believe that customers or people in general have internal mental processes, so this is the point of cognitive theory (Feldman, 2006)....
6 Pages (1500 words) Essay

Marketing Principles of Nike

The report is divided into three sections which deal with different marketing concepts and how they can be implemented by Nike group in order for it to achieve merit/distinction criteria in its operations.... The second task is particularly concerned with explaining different marketing concepts such as positioning, targeting as well as micro and macro economic factors and how they are impacting on Nike.... Elements of the marketing mix such as price, place, promotion and product are very important when marketing a particular product....
20 Pages (5000 words) Essay

The consumers of Coca-Cola

This is when the advertising campaign comes in handy when people are looking for information that can be used to satisfy their needs.... hellip; In this case, particular attention is put on Coke Zero's advertising campaign in order to establish how it is intended to influence the buyer decision process.... The researcher of this essay aims to analyze the consumer buying process of Coca-Cola company, that is mainly influenced by a variety of factors, such as advertising campaign and many else, that are very effective tools in raising awareness among the consumers....
9 Pages (2250 words) Essay

Branding: People Will Spend More on Big Name Brands

A is $3 cheaper than B, yet B succeeds and A fails, despite being lower in price.... An essay "Branding: people Will Spend More on Big Name Brands" claims that this change in behavior has made luxury into a reality and it no longer remains a handmaid of lucky few.... Luxury has the power to give to people an idealized image of beauty and satisfaction.... Until the mid 20th century few people could afford to have luxurious items and only a privileged class of society had access to luxurious items....
12 Pages (3000 words) Essay

Understanding Markets: Dyson Goes without Blades

This report at first assesses the likely demand of Dyson Air Multiplier in the marketplace in the light of economic theory; it then discusses the consumer behavior relating to the fan and price as well as income elasticity and finally looks into the likeliness of the fan creating a monopoly.... Though the level of satisfaction is high among the customers, the price of the fan is considered to be very high.... nbsp;   Dyson Air Multiplier has got the price as well as income elastic demand....
12 Pages (3000 words) Case Study

The Concept of Conspicuous Consumption

The paper 'consumer behavior" is purposed to analyze why people conspicuously consume.... As a result, an individual gains respect and honor depending on how much he earns, which assist him in retaining his name in the society.... Several theories have been developed explaining conspicuous consumption; the theory of the leisure class of 1899 explains that conspicuous consumptions are associated with the strength of an individual's reputation in relation to the amount of money he spends (Association for consumer research, 1992)....
6 Pages (1500 words) Essay

Marshallian Demand and Supply Theory

uite clearly, the laws of demand and supply are helpful in predicting the direction of changes in price and quantity, whether it would increase or decrease, in response to various shifts in demand and supply.... The paper “Marshallian Demand and Supply Theory” examines the Marshallian model of supply and demand, which tries to present those choices that the customers would make in each price and wealth situation.... However, supply, on the other hand, would have a positive relationship with the price....
6 Pages (1500 words) Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us