How can consumer's expectations reduce and increase demand?
I really need help with this question.
Thanks
Macy:))
If a business falls short of consumers' expectation, then demand falls. The consumers don't want what the company is selling.
Some good examples are in the fashion industry -- in which clothes quickly go out of style -- and woe to the company that continues to try to sell clothing the consumer doesn't want.
However, if consumers want and need a product, the demand will greatly increase.
I remember when McDonald's was first getting started nationwide. In the early 1960s, it was difficult to find inexpensive restaurant food. As we travelled around the state, we desperately needed McDonald's to feed ourselves and young children on a very limited budget. Voila -- McD met the demand and provided consumers what they wanted.
Thanks Mrs. Sue you've really helped me alot!
Macy:))
You're very welcome, Macy. I'm glad I could clarify this for you.
To understand how consumer's expectations can affect demand, let's break it down step by step.
1. Consumer's Expectations: Consumer expectations refer to the beliefs or assumptions consumers have about future market conditions, prices, product availability, and other relevant factors. These expectations are often based on past experiences, economic conditions, or information received from various sources.
2. Reduced Demand: If consumers have negative expectations about the future, such as anticipating higher prices, economic downturns, or reduced product quality, it can lead to a decrease in demand. This is because consumers may delay their purchases, look for alternative products or substitute goods, or simply choose to save their money.
3. Factors causing reduced demand include:
- Anticipation of price increases: If consumers expect prices to rise in the near future, they may choose to postpone their purchases until the prices stabilize or decrease.
- Economic uncertainty: During times of economic instability or downturns, consumers may become more cautious with their spending, leading to a reduction in demand.
- Negative perceptions or reviews: If consumers hear or read negative feedback about a product or brand, their expectations about its performance or quality may decline, resulting in reduced demand.
4. Increased Demand: On the other hand, positive expectations can lead to an increase in demand. When consumers expect favorable market conditions, lower prices, improved product features, or better value for their money, they are more likely to make purchases.
5. Factors causing increased demand include:
- Anticipation of price decreases: If consumers anticipate future price drops, they may expedite their purchases to benefit from the lower prices.
- Positive marketing or word-of-mouth: If consumers receive positive messages or recommendations about a product, it can create a desire and increase their expectations, thereby boosting demand.
- Perceived value or quality: When consumers believe that a product offers them a good deal, excellent performance, or superior quality, they are more likely to buy it.
In summary, consumer expectations can have a significant impact on demand. Negative expectations can reduce demand, while positive expectations can increase demand. It is crucial for businesses to monitor and understand consumer expectations to effectively manage demand for their products or services.