When choosing a product, buyers are guided primarily by its cost. Therefore, the main factor influencing demand is price.
The price of the product itself
The law of supply and demand establishes an inverse relationship between the price of a product and the amount of demand. However, Giffen and Veblen goods do not obey it. That is, with a sharp jump in the price of fuel, bread or cereals, their sales will remain high, since buyers will refuse less important products. Similarly, when branded bags become more expensive, wealthy people will strive to buy them to emphasize their high position in society.
Price of interchangeable goods
Substitutes can be products offered chinese overseas europe data package on the same market and intended for specific purposes. An increase in the cost of a substitute leads to an increase in demand for the product, and vice versa. For example, when gasoline becomes more expensive, the need for alternative energy sources increases.
Prices of complementary products
Complementary goods are most often used together (camera film, printer cartridges, etc.). When their cost increases, demand for the main product falls. Thus, when gasoline prices rise, car sales decrease.
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10 Non-Price Factors Affecting Demand
Consumer income
When residents of a country or region start earning more on average, a fair wage system is established, etc., their interest in the products offered increases. At the same time, business owners need to remember that fluctuations in demand for individual product groups may vary and sometimes be directed in the opposite direction. In particular, the volume of sales on the secondary market decreases, since with increasing income, consumers prefer modern, high-quality products. Accordingly, all products are divided into lower, normal and higher categories.
Tastes and fashion
The desire of buyers to buy the latest models is actively fueled by advertising and publications on the Internet. As a result, they become more popular; in turn, outdated models no longer attract the audience.
The influence of fashion is especially noticeable in the clothing and accessories market. When choosing things, people are guided by the advice of authoritative persons and the preferences of celebrities. Similar trends are observed in other areas. For example, new trends periodically appear in interior design. Thus, in the second half of the 2010s, Scandinavian minimalism was popular in decorating apartments.
At the same time, changes in consumer tastes can be spontaneous, and then it is not always possible to foresee them in advance. Take, for example, pop-its, which became trendy in 2021, but a year later lost their place in the children's toy market to Hagi Vagi.
Number of consumers
The population size can change as a result of both an increase in the birth rate or a decrease in the death rate, as well as migration. Thus, the number of people permanently residing in the largest cities is steadily growing, and demand increases as a result.
Number of consumers
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When a company enters the international market, it is possible to significantly increase the number of users of the product, but for this it must be characterized by high quality and versatility. For example, selling clothing in a national style makes sense only in specific regions where the corresponding cultural traditions have become stronger.
Prices for substitutes
Nowadays, any product can be replaced with a similar functionality. The market for certain categories (TVs, cars, etc.) is dominated by several competing brands. The rise in prices for a particular model encourages consumers to choose a budget option. This applies to products with similar characteristics. When it comes to complex devices or electronics, consumers pay special attention to their specific functions.
Consumer Expectations
Consumer expectations related to changes in income or price over time have a major impact on demand. Thus, with a high probability of natural disasters, demand for essential goods increases, and an expected drop in prices for the product of interest forces the consumer to postpone the purchase.
The occurrence of this factor is extremely difficult to predict during business planning, and most often it is not taken into account.