ILO
a) Factors leading to a change in demand: - changes in the price of substitutes and complementry goods - changes in consumer incomes - fashions, tastes and preferences - advertising and branding - demographics - external shocks - seasonality |
•Demand is the amount of a good that consumers are willing and able to buy at a given price.
7 factors causing a change in demand
1. Population
2. Advertising
3. Substitutes
4. Income (Disposable)
5. Fashion and Taste
6. Interest rates
7. Complementary goods
2. Advertising
3. Substitutes
4. Income (Disposable)
5. Fashion and Taste
6. Interest rates
7. Complementary goods
Substitutes
Complementary
•Demand for one type of good will affect demand for another, purchase is somehow linked
•What complimentary goods would effect the demand of the PS4? •What other products are the with examples of complementary goods that go with them? •What would be the benefit of cheap complementary goods? |
How would the price of the coffee capsules affect the sales of coffee making machines?
|
Incomes
Can you think of a range of different products that may be bought by each family? How do these lists differ? Think inferior / luxury goods
Normal goods – products or services that grow as economy grows e.g.
•Cars •Cinema tickets |
Luxury – products or services that grow if the economy grows by more than its usual rate e.g.
•Foreign holidays •Champagne Can you think of any others? |
Inferior goods – Sales of these goods fall when people are better off
Can you think of any? |
Advertising
|
- Why have McDonalds advertised in this way?
- How will this help them as a business? - What potential drawbacks are there? |
Population
•The UK is experiencing a baby boom – what kinds of products would experience a surge in demand as a result?
|
Fashion and tastes
Interest rates
The cost of borrowing
What affect will low interest rates have? What types of products might this have an effect on? |
|
|
Demand risks
http://www.bbc.co.uk/news/29201191
|
|