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The answer to your question cannot be given without knowing what you're selling. Prices of commodities (like gasoline or flour) have an inverse relationship to demand...as price goes up, less is demanded. When there are several options or substitutes available, a consumer will select the lowest price option.
Pricing is not usually just a simple function of optimizing supply and demand, however. It is sometimes true that lowering the price of a good will increase the quantity demanded, and vice versa. But it is also true that raising the price of a good can also sometimes cause an increase in demand for that good. There are two examples of this: 1) a luxury (like a Rolex or a Yacht) and 2) a "Giffen" good (a paradox in which demand for a non-luxury good rises in tandem with its price).
The answer I want to leave you with is this: When consumers have limited means of comparing substitutes, price can serve as a leading indicator of an item's value. If something costs more, there must be a reason. And that in itself is sometimes good enough of a reason to pay more for something.
When given three options, and limited time and/or information to compare them, consumers will usually pick the middle option.
What else can I help you with?
What is customized pricing?
Perhaps you mean CONSUMER price index, which is a tool to measure changes in the price level of consumer goods and services purchased by households in a given country.
What is the meanning of retail price?
how much stores sell the particular product forthe word retail price means .. the price paid by the consumer.:)
What is the importance of understanding consumer behavior?
Consumer is the most important person. The business revolves around the consumer... So, while operating as a firm, it is essential for the firm to gain the good understanding of it's target market. The more the Consumer Behaviour is learnt the more the needs and wants of the Customers are fulfilled. The Study of consumer behaviour helps us; • To design the optimal product or service for customers. • To determine where the product or Service should be available that would easy for the customers to buy. • To determine what price will the customers give up purchasing product or service? • To determine which method of Promotion would be most effective for getting the customers to buy a product. • It helps in changing the behavior of the consumers. • To improve performance of the organization. • To achieve the organizational objectives
Name and explain three reasons why wholesalers and retailers compute their markup on the retail price rather than on the cost price?
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What are the importance of price sensitivity to marketers?
Price sensitivity is crucial for marketers as it helps them understand how changes in price can affect consumer behavior and demand for their products. By analyzing price sensitivity, marketers can optimize pricing strategies, segment their target audience, and enhance promotional efforts to maximize sales and profitability. Additionally, understanding price sensitivity allows marketers to identify opportunities for product differentiation and value proposition, ensuring they appeal to both price-conscious consumers and those willing to pay a premium. Overall, it informs strategic decision-making and competitive positioning in the market.
Explain the factors that influences consumer's behavior?
Three factors that influence consumer behaviour are: 1. Consumer loyalty - When a consumer returns to you every time or keeps on purchasing from your business. 2. Environment - The environment of your business or where your business is located can affect your consumer e.g. If the surrondings are not healthy or clean it will affect your business 3. Price - If your prices are too high then persons would not want to buy from you, but if they are at a reasonable price then you would have a great amount of consumers and that can eventually lead to consumer loyalty.
Why is consumer behaiviour neccessarry in producing buying and selling explain?
Consumer behavior is necessary in producing buying and selling in order to give you direction. The consumer behavior will guide you as to how much to produce, how long it will take for the consumer to make a purchase and what kind of price range the consumer is willing to pay.
How does a change in price affect consumer behavior in terms of substitution versus income effect?
A change in price can affect consumer behavior in two main ways: substitution effect and income effect. The substitution effect occurs when consumers switch to a cheaper alternative when the price of a product increases. The income effect refers to how a change in price impacts the purchasing power of consumers, influencing their overall buying decisions.
What factors contribute to the demand for inelastic goods and how does their price elasticity affect consumer behavior?
Factors that contribute to the demand for inelastic goods include the necessity of the product, lack of substitutes, and consumer habits. Inelastic goods have a low price elasticity, meaning that changes in price do not significantly affect consumer behavior. Consumers are willing to pay higher prices for inelastic goods because they are essential or have limited alternatives, leading to relatively stable demand regardless of price fluctuations.
What is the relationship between the price consumption curve and consumer behavior in economics?
The price consumption curve in economics shows how changes in the price of a good or service affect the quantity that consumers are willing to buy. It helps to understand how consumers respond to price changes and make decisions about what to purchase. By analyzing this relationship, economists can gain insights into consumer behavior and preferences.
Can you explain the concept of bill hopping and how it impacts consumer behavior"?
Bill hopping is when consumers switch between different service providers to take advantage of promotional offers or better deals. This behavior can impact consumer behavior by encouraging them to be more price-sensitive and less loyal to a single provider.
Can you provide an example of the substitution effect and explain how it impacts consumer behavior?
The substitution effect occurs when consumers switch to a cheaper alternative when the price of a product increases. For example, if the price of a brand-name cereal goes up, consumers may choose to buy a generic brand instead. This impacts consumer behavior by influencing their purchasing decisions based on price changes.
What is the difference between the income effect and substitution effect in terms of their impact on consumer behavior?
The income effect refers to how changes in income affect the quantity of a good or service that a consumer can afford to buy, while the substitution effect refers to how changes in the price of a good or service affect the consumer's decision to buy a different, substitute product. Both effects influence consumer behavior by impacting purchasing decisions based on changes in income and prices.
What impact does the tax on goods have on consumer behavior and overall market dynamics?
The tax on goods can influence consumer behavior by increasing the price of products, leading to potential changes in purchasing decisions. This can affect demand for certain goods and impact market dynamics by influencing supply and pricing strategies.
What is the impact of the substitute effect on consumer behavior and market dynamics?
The substitute effect influences consumer behavior and market dynamics by causing consumers to switch to cheaper alternatives when the price of a product increases. This can lead to changes in demand for different products and affect competition among businesses in the market.
How does the calculation of income and substitution effects impact consumer behavior when the price of a good changes?
When the price of a good changes, the calculation of income and substitution effects influences consumer behavior. The income effect refers to how changes in price affect a consumer's purchasing power, while the substitution effect relates to how consumers switch between goods based on price changes. These effects together determine how consumers adjust their spending patterns when prices change, ultimately impacting their overall consumption choices.
How do technologies affect our economic decisions?
the consumer economic decisions can affect the price and supply of a commodity
