How do consumers respond to price changes?

What factors influence how consumers react to price changes?

Consumers often respond to price changes based on factors like perceived value, income levels, and availability of substitutes.

Do consumers tend to buy more when prices drop?

Yes, generally, a decrease in price can lead to increased demand, especially if the product is considered essential or desirable.

What about when prices increase?

When prices increase, consumers may reduce their purchases, seek alternatives, or delay buying until prices stabilize.

Are there any exceptions to these trends?

Yes, luxury goods may see increased demand despite price hikes due to perceived exclusivity and status.

How do psychological factors play a role in this?

Psychological factors, like consumer perception and brand loyalty, can significantly influence reactions to price changes.