This fall incomes of the farmers will cause a decrease in the demand for industrial products, say cloth, and will result in a shift in the demand curve to the left. A change in any of these factors leads to change in the tastes and preferences of consumers.
Therefore, we can say that goods are not always inferior or normal; it is the level of income of consumers and their perception about the need of goods.
The following are the factors which determine demand for goods: Tastes and Preferences of Consumers: If income is equally distributed among people in the society, the demand for products would be higher than in case of unequal distribution of income.
Influences the demand for a product in the market to a large extent. Refer to goods whose demand decreases with increase in the income of consumers. This leads to the high or low consumption of a product by different segments of the society.
Similarly, when the consumers expect that in the future the prices of goods will fall, then in the present they will postpone a part of the consumption of goods with the result that their present demand for goods will decrease. When people would take more milk or would prepare more khoya, burfi, rasgullas with milk; the demand for sugar will also increase.
Likewise, when because of drought in a year the agricultural production greatly falls, incomes of the farmers decline. Consequently, consumers reduce the consumption of old products and add new products for their consumption.
The decrease in demand does not occur due to the rise in price but due to the changes in other determinants of demand. Decrease in Demand and Shift in the Demand Curve: Similarly, when the consumers hope that in the future they will have good income, then in the present they will spend greater part of their incomes with the result that their present demand for goods will increase.
Therefore, when the prices of the related goods, substitutes or complements, change, the whole demand curve would change its position; it will shift upward or downward as the case may be.
When people would take more milk, the demand for sugar will also increase. Another important cause for the increase in the number of consumers is the growth in population. The income-demand relationship can be analyzed by grouping goods into four categories, namely, essential consumer goods, inferior goods, normal goods, and luxury goods.
Apart from this, if consumers anticipate an increase in their income, this would result in increase in demand for certain products.
The result of this is that the demand for Coca-Cola has increased very much. For example, if there is change in fashion, consumers would prefer new and advanced products over old- fashioned products, provided differences in prices are proportionate to their income.
If these other things or the determinants of demand change, the whole demand schedule or the demand curve will change. Therefore, when the prices of the related goods, substitutes or complements, change the whole demand curve would change its position; it will shift upward or downward as the case may be.
The demand for goods also depends upon the incomes of the people. When as a result of the rise in the income of the people, the demand increases, the whole of the demand curve shifts upward and vice versa.
As a result of this, the demand for those goods will increase which are generally purchased by the poor because the purchasing power of the poor people has increased and, on the other hand, the demand for those goods will decline which are usually consumed by the rich on whom progressive taxes have been levied.
The complementary goods are inversely related to each other. Decrease in demand for a commodity may occur due to the fall in the prices of its substitutes, rise in the prices of complements of that commodity and if the people expect that price of a good will fall in future.
Changes in Prices of the Related Goods: The Number of Consumers in the Market: If progressive taxes are levied on the rich people and the money so collected is spent on providing employment to the poor people, the distribution of income would become more equal and with this there would be a transfer of purchasing power from the rich to the poor.
This results in the increase demand for a product.Security Bill, etc., are positively influencing the country’s FMCG market. India FMCG market has been segmented into Food & Beverages, Personal Care, Household Care & Others. Among these categories, the country’s FMCG industry was dominated by Food & Beverage infollowed by personal care and household care.
The 5 determinants of demand are price, income, prices of related goods, tastes, and expectations. A 6th, for aggregate demand, is number of buyers. The Balance Five Determinants of Demand with Examples and Formula. Menu Search Go. Go.
Investing. Basics Stocks Real Estate Value Investing View All ; Five Determinants of Demand. FMCG Concept and Definition: The term FMCG (fast moving consumer goods), although popular and frequently used does not have a standard definition and is generally used in India to refer to products of everyday use.
Conceptually, however, the term refers to relatively fast moving items that are used directly by the consumer. 6 Important Factors That Influence the Demand of Goods. Article Shared by. For instance, in India the demand for many essential goods, especially food grains, has increased because of the increase in the population of the country and the resultant increase in the number of consumers for them.
The decrease in demand does not.
An Overview of Indian FMCG Sector. the FMCG market in India is expected to further expand to. tential are resulting in increased demand for FMCG products. FMCG SECTOR IN INDIA The fast moving consumer goods (FMCG) sector is the fourth largest sector of the economy with the size of about more than Rs billion.
FMCG sector generally includes a wide range of frequently purchased consumer product such as soaps, dairy products, confectionary, soft drinks, fruits and vegetables and batteries.Download