Consumer Behavior - Influence of Economic Factors (Price)

This article discusses the influence of economic factors, specifically price, on consumer behavior. It explores internal and external influences on pricing decisions and their impact on product prices.

Running head: CONSUMER BEHAVIOR – INFLUENCE OF ECONOMIC FACTORS
(PRICE)
CONSUMER BEHAVIOR – INFLUENCE OF ECONOMIC FACTORS (PRICE)
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Author Note

1CONSUMER BEHAVIOR – INFLUENCE OF ECONOMIC FACTORS (PRICE)
The price of a product or service that is marketed by a business organization is known to
be influenced by a plethora of factors that are either internal or external in nature.
Internal influences
The major internal factors that have been affecting the price of a product are enlisted
below.
 The cost of raw materials
The cost of the raw materials is one of the major factors that might affect the price of the
given products. The higher cost of the raw materials required for the manufacture of the
products, the higher the price of the products (Joshi and Rahman 2015). The price of the
product is found to be directly linked to the cost that the company had incurred in the
procurement of the raw materials that are required for the manufacturing of the product.
 The cost of the suppliers
The cost that is demanded by the suppliers of the organization is also known to have been
affecting the price of the product in the similar manner in which the cost of the raw
materials affect the price (Kumar and Ghodeswar 2015). The price demanded by the
suppliers of the products tend to reflect in the prices that are charged from the clientele of
the company.
 The cost of storage
The storage cost also affects the price of the given products. The higher the cost of
storage of the products, the higher the price of the products.
 The cost of transportation
The price of the products further faces an increase due to the cost of the transportation
that is incurred by the concerned company as well.

2CONSUMER BEHAVIOR – INFLUENCE OF ECONOMIC FACTORS (PRICE)
 The cost of manufacturing
The manufacturing cost of the product is one of the most influential factors that affect the
product prices. The price of the product depends hugely on the cost of manufacturing of
the products (Martinho et al. 2015). The cost of manufacturing is observed to be highly
influential in the development of the product as well.
The above discussion points out the various factors that are responsible for the proper
setting of the prices of the products and the services that are marketed by the business
organizations.
External influences
The price of the products and services are often observed to have been fluctuating on the
basis of the various external factors that have been affecting the company. These factors tend to
affect the decisions that are undertaken by the clientele of the company. The clients of the
company are majorly influenced by the various governmental reforms and the other economic
factors such as the inflation rates that are implemented within the concerned market (Mirabi,
Akbariyeh and Tahmasebifard 2015). The price of the concerned products is influenced by the
revenues that the company has to pay towards the governmental bodies that have been present
within the concerned territories.
The price of the product is further affected by the degree of competition that is faced by
the organization in the given markets. The companies that have been facing a huge amount of
competition within the concerned markets are generally observed to have been demonstrating a
low-price strategy within the given organization. The majority of the companies that have been
dealing in the manufacture of the various products are further observed to look into the demands

3CONSUMER BEHAVIOR – INFLUENCE OF ECONOMIC FACTORS (PRICE)
of the clients of the company (Belwal and Belwal 2017). The clientele of the company plays a
huge role in the development of the prices of the products. The company tends to set the price
range of the product while aiming the launch of the product for a certain range of the target client
within the markets. The clients of the company tend to have a huge influence on the pricing
strategy that is adopted by the concerned company. The pricing strategy of the concerned
organization further depends on the economic conditions that are maintained by the target
clientele of organization. The lower economic status of the target clientele within the
organization is known to have been influencing the pricing strategy of the concerned company.
The companies within the international markets tend to demonstrate a fluctuation on the basis of
the economic conditions that are maintained within the societal boundaries wherein the company
has been featuring (Chekima et al. 2016). This often assists in dealing with the differentiation of
the competing firms on the basis of the prices of the products.

4CONSUMER BEHAVIOR – INFLUENCE OF ECONOMIC FACTORS (PRICE)
References
Belwal, R. and Belwal, S., 2017. Factors affecting store image and the choice of hypermarkets in
Oman. International Journal of Retail & Distribution Management, 45(6), pp.587-607.
Chekima, B., Wafa, S.A.W.S.K., Igau, O.A., Chekima, S. and Sondoh Jr, S.L., 2016. Examining
green consumerism motivational drivers: does premium price and demographics matter to green
purchasing?. Journal of Cleaner Production, 112, pp.3436-3450.
Joshi, Y. and Rahman, Z., 2015. Factors affecting green purchase behaviour and future research
directions. International Strategic management review, 3(1-2), pp.128-143.
Kumar, P. and Ghodeswar, B.M., 2015. Factors affecting consumers’ green product purchase
decisions. Marketing Intelligence & Planning, 33(3), pp.330-347.
Martinho, G., Pires, A., Portela, G. and Fonseca, M., 2015. Factors affecting consumers’ choices
concerning sustainable packaging during product purchase and recycling. Resources,
Conservation and Recycling, 103, pp.58-68.
Mirabi, V., Akbariyeh, H. and Tahmasebifard, H., 2015. A study of factors affecting on
customers purchase intention. Journal of Multidisciplinary Engineering Science and Technology
(JMEST), 2(1).