It will change market trend and create new opportunities for business as spending patterns of consumer changes.
Market trend changes all the time. Most recently, consumers prefer to buy sustainably made products as they become more aware of climate change. This has influenced many producers to change their business direction and increase more sustainable initiatives, as market condition changes.
However, spending patterns of consumers are also influenced by price and non-price factors, as consumers are likely to purchase more of the product if price reduces. The non-price factors include;
Income changes - increased income will increase disposable income, enabling more spending power, and vice versa
Increased population - will ensure that more output will be demanded. This would encourage more business to start and increase competition.
Change in taste and preference - The change in consumer taste towards sustainable products is an example of changes in taste and preference.
Social and cultural factors - Tea is a cultural drink that is not only enjoyed by the English but in China as well. They are however, not consumed as much in America as coffee - a substitute of tea.
Seasonal changes - Demand for warm clothes tend to increase during autumn and winter, while it reduces come summer and spring. As such, most retailers would offer a discount on winter clothes during spring to clear their inventories for their summer collection.
Technology - As more features are introduced on smartphones, it is priced higher, while telco subscription cost less due to increased competition and economies of scale, causing less demand for physical phone lines to be installed at their homes.
TRY PAST EXAM QUESTIONS
Identify two possible reasons why customers’ spending patterns change. (2 marks) Oct/Nov 2018/13