Question

Choose one of the influences to the global consumer. Define the influence in your own words. Provide an example of the influence from the Internet, and discuss how the influence played out in that story. Put on your CEO hat - what would you do to try and take that influence into account with your product or service?

Answer 1

There are various factors that affect behaviour of consumers. Some of the important factors would be Economic or functional factors, personal or group preferences, Marketing campaignes etc. We need to consider all these factors into account for product to succeed but if we take into consideration one factor that is most influencial then it would be Purchasing Power of consumer.

Purchasing Power of consumer

It's the basic and most required factor in the market. Purchasing power of a consumer plays an important role in influencing the consumer behavior. The consumers generally analyze their purchasing capacity before making a decision to buy and products or services. The product may be excellent, but if it fails to meet the buyers purchasing ability, it will have high impact on it its sales. Segmenting consumers based on their buying capacity would help in determining eligible consumers to achieve better results. Let's say for example A country like India dosen't have a huge market for luxury cars basically beacause the GDP of India is very low. Purchasing power of people in India is so low that there is no enough demand for luxury cars in India hence eventhough the product maybe excellent but it can't flourish in such markets.

Let's take this further ahead, Inflation is the number-one enemy of economy-wide purchasing power. Inflation is the process whereby prices slowly rise throughout all sectors in an economy, effectively reducing the purchasing power of fixed assets and current income levels. It is an ever-present reality that must be counterbalanced by increases in wages, interest rates and other factors over time. It is important to consider inflation and make adjustment in production cost of product or service so that it is not too pricey.

Employment factors affect total purchasing power rather than causing a relative shift. Employment does not necessarily cause a currency to become stronger, yet it puts more currency in the hands of consumers, boosting commercial and tax revenues. Hence it indirectly affects the currency and purchasing power of consumers Per capita Gross Domestic Product (GDP), calculated by dividing GDP by population, is a popular measure of economy-wide income levels for consumers and businesses.

Fluctuating exchange rates affect purchasing power in relation to other currencies. As one nation's currency devalues against another, goods in the second country will be higher in the first country's currency. This fact in itself does not necessarily affect purchasing power for domestic purchases, but businesses that rely on suppliers in the second country can experience dramatic price increases for imported goods. These businesses may pass their higher costs on to consumers, contributing to inflation and diminished domestic purchasing power.

The willingness of banks to lend money to consumers and businesses affects total purchasing power in much the same way as higher salaries and employment levels. With a line of credit, consumers and companies can spend more than they actually have, giving a static, ever-present boost to their personal purchasing power. Lenders reap the benefits of credit agreements by earning interest revenue, which gives them more money to spend in the economy, boosting per capita GDP.

Hence all above factors are needed to take into consideration while manufacturing a product and purchasing power of consumers. Making the product easily available in the market at affordable price should be the startegy at core level but if it comes too difficult to achieve that then one can always incease the level or try to find the other resources that will provide finance for manufacture of products. So that more people will buy the product and will be better of.