consumer demand spending behavior

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C ONSUMER DEMAND SPENDING BEHAVIOR ECONOMIC ASPECTS O F BUYING BEHAVIOR

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PPT of Consumer Demand Spending Behavior

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CONSUMER

DEMAND

SPENDING BEHAVIOR

E C O N O M I C A

S P E C T S OF B

U Y I NG

B E H AV I OR

• Buying power• Consumers willingness to spend• Spending pattern

ECONOMIC ASPECTS OF BUYING BEHAVIOR

BUYING POWER• the ability to purchase goods and servi

ces; value of money, as measured by the quantity or quality of products and services it can buy.

• Strength of person’s buying power depends on:

- size of resources (goods, services & financial holdings)

- state of the economy Inflation; buying power

decreasesDeflation; buying power

increases

Financial Sources of buying power• Income - amount of money received

through wages, rents, investments, pensions, and subsidy payments for a given period.

Disposable Income – after-tax incomeTax = Disposable Income Tax = Disposable Income

Discretionary Income –income that is available for spending and saving after taxes and basic necessities have been purchased.

• Credit – enable people to spend future income now or in the near future.

Factors whether consumers use or forgo credit:a. Credit must be available to consumers.b. Interest rates.c. Credit terms, such as size of down

payment and amount and number of monthly payments.

• Wealth – accumulation of past income, natural resources and financial resources.

When people become wealthier, they gain buying power in three ways:1. They can use their wealth for current

purchases.2. To generate income.3. To acquire large amounts of credit.

CONSUMERS WILLINGNESS TO SPEND• is, to some degree, related to their ability to

buy.

Elements that influence willingness to spend:a. Elements affecting specific product – a

products absolute price and its relative to the price of substitute products; amount of satisfaction currently received or expected in the future from a product already owned.

b. Elements influencing spending in general – expectations about future employment, income levels, prices, family size and general economic conditions.

CONSUMER SPENDING PATTERNS• indicate the relative proportions of

annual family expenditures or the actual amount of money spent on certain kinds of goods and services.

Two types of spending patterns:1. Comprehensive spending pattern –

the percentages of family income alloted to annual expenditures for general classes of goods and services.

2. Product-specific spending patterns - indicate the annual dollar amounts families spend for specific products within a general product class.

GENERAL ECONOMIC CONDITIONS• The overall states of the economy fluctuates

in all countries.• Affect (and are affected by) the forces of

supply and demand, buying power, willingness to buy, consumer expenditure levels, and the intensity of the competitive behavoir.

• Fluctuations follow a general pattern that is often referred to as the “business cycle”.

4 STAGES OF BUSINESS CYCLE1.Prosperity – unemployment is low and

aggregate income is relatively high.2.Recession – unemployment rises, total

buying power declines.3.Depression – extremely high

unemployment, wages are low, total disposable income is at minimum and consumers lack confidence in the economy.

4.Recovery – economy moves from recession to prosperity.

TECHNOLOGICAL FORCES

TECHNOLOGY• Knowledge of how to accomplish tasks

and goals; often this knowledge comes from scientific research.

• Technology itself is neither good nor bad. Its effects are determined largely by how it is applied.

• Technological developments can put some people out of business while opening up new business opportunities to others.

The Effects Of Technology On Society• Technology determines how we satisfy our

physiological needs.• Technological developments have improved our

standard of living, thus giving us more leisure time.

• Education, information, and entertainment have been improved through technology.

• Undesirable side effects such as unemployment, polluted air and water, and other health hazards.

Impact Of Technology On Marketing Activities• Technological improvements in production

processes and materials sometimes result in more durable, less expensive products.

• Bacause of technological changes in communication, marketers now can reach large masses of people through variety of media more efficiently.

• Technological advances in transportation enable consumers to travel farther and more often to shop at a larger number of store.

• Also have affected the producers ability to get products to retailers and wholesalers.

ADOPTION AND USE OF TECHNOLOGYTechnology Assessment - managers try to

forsee the effects of new products and processes on their firms operation, on other business organizations, and on society in general.

• How a firm uses (or does not use) technology is important for its long-run survival.

• Poor decision about technological forces may even drive a firm out of business.