The Veblen Effect
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For example, when a schoolchild telegram dating philippines really wants to buy an expensive mobile phone, he pursues the goal of "growing up" in the eyes of his peers, becoming a more popular person at school and raising his status and his own opinion of himself as a person. The more expensive the purchased phone is, the higher the status of the person who bought it rises and the stronger the desire for this purchase is.
In this case, the psychological moment of the Veblen effect exceeds the effect of the real income effect and the effect of substitution with a similar product. Such a buyer evaluates first of all not the quality of the product and its usefulness for life, but the prestige and significance of the price that he is willing to pay for the purchase of this product in the opinion of the people around him. When the Veblen effect operates, the rule applies: the higher the price of the product, the stronger the desire to buy it.
How to increase demand and revenue without raising prices?
The strategy of most manufacturers remains stable price containment for goods, due to which demand increases. An excellent example is the well-known McDonald's restaurant chain. There, prices for products do not increase for a long period of time, but the following types of promotions are very common: a combo lunch, in which each product will be sold for 50 rubles. Psychologically, the amount of 50 rubles does not seem impressive, but when a large number of products are included in the combo, the amount becomes several times larger. Thus, the client does not initially plan a large purchase, but makes it, pursuing the goal of saving money. Sales are growing, which cannot but please the manufacturers.
Constant changes in demand for goods are influenced by price and non-price economic factors. They represent changes in market prices under the influence of competition and the growth or decrease in the cost of complementary and interchangeable goods. Non-price factors in this case are represented by changes in tastes and preferences of buyers under the influence of fashion and changing seasons.
Thus, not only demand but also buyers' reaction to the changes that occur depend on the factors. For example, if there is a seasonal circumstance, to develop a strategy, predict in advance the possible percentage of the sales decline level and expand the range by including a product group that does not have a seasonal feature or offer an additional range of goods and services.
This simple method will help you save revenue and minimize potential risks and losses. When tracking the growth of prices for raw materials and production, an excellent solution would be to optimize the entire process, find new suppliers who offer their goods for purchase at attractive prices.
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