When the need is urgent, it becomes a motive. Perception involves choosing, organizing and assimilating information for a meaningful experience. Consumers go through three perceptual processes. These are: • selective attention – where marketers attract the buyer’s attention • selective distortion – where the buyer interpret the information to suit their beliefs • selective retention – where marketers try to retain information that supports their beliefs Beliefs and Attitudes surround a consumer’s view of a product and alsobuild the brand image, thereby affecting their buying behaviour. This triggers a marketer’s interest in them.
PRICE-QUALITY RELATIONSHIPS The conceptualization of market response as influenced by different segments of consumers, each with different perceptions of and preferences for product characteristics, leads to a managerially useful means for determining the optimum levels of price and quality to set for a product. In order to apply Shugan's model to a real market situation, one would need data about the market's response coefficients for both price and quality. The coefficient of sensitivity to changes in price could be determined from data collected in actual field manipulations of prices, or from experimental simulations, such as Dickson and Sawyer's (1984) approach. The quality-response coefficient, however, would be somewhat more difficult
The relationship between price elasticity of demand and total revenue bring together some important microeconomic concepts (Miller 2012). In the previous question, you can see how raising a price can bring the demand for a product down. This will have an obvious effect on total revenue and will help a firm when it comes time to change its price. There are times when changing the price of a product will not create less or more of a demand for a
However, this would imply stationarity of price series around a steady state, which is against the empirical findings of non-stationarity of most commodity price series around the globe. To account for this, Muth, 1961 enlightened that competitive storage model was developed to explain positive autocorrelations in prices), as well as their kurtosis and positive skewness (Deaton & Laroque, 1992). Frankel (1986) extended the competitive storage model by adding the overshooting hypothesis, which links the price dynamics in the commodity markets to changes in the monetary policy. Furthermore, Deaton and Laroque (2003) showed that it is also possible to represent positive autocorrelation, skewness, and kurtosis of observed data series with a rational expectations model without competitive storage. Other major challenges in empirical estimations are non-linear components, structural breaks or regime shifts (Deaton and Laroque,
2.3.3 Theory of Assimilation-Contrast The theory of assimilation-contrast is a combination of both the assimilation and the contrast theories; the model postulates that satisfaction is a function of the magnitude of the discrepancy between expected and perceived performance (Hoyer and MacInnis, 2001). Peyton et al. (2003) noted that when there is a large discrepancy between expectations and perceived performance, contrast effects occur and the consumer tends to magnify the perceived difference. However, it should be noted that most discrepancies with a given product are not just magnified or exaggerated, but they are simply the true evaluation of the product, based on what the consumers’ have experienced. 2.3.4 The Theory of Negativity The
This component can be related to an individual’s loyalty to the brand, purchase intentions or actual buying behavior towards the attitude object (Broderick and Pickton, 2005; Evans et al., 2008). The purchase behavior of an individual is believed to be influenced by the cognitive and affective components of attitudes (Evans et al., 2008). In the field of marketing and consumer behavior research, the conative component is often regarded as an expression of the consumers’ intentions to purchase (Leon, Schiffman, Kanuk, & Hansen,
The variables that are held settled in the supply schedule are input costs, technology, price expectations, and government taxes or subsidies. To get the information for a supply curve, we change just the cost of a good and watch how a maker reacts to the price change. The individual supply curve is positively sloped, reflecting the law of supply. The law of supply: Like the law of demand, the law of supply shows the amounts that will be sold at a certain price. This means higher the price, higher the quantity supplied.
(Spohn, 2002). In order to explain human economic behaviour, economists developed rational choice theory, which helps economists to make estimations about the behaviour of an economic individual and can best be defined as "consumers have transitive preferences and seek to maximise the utility that they derive from those preferences, subject to various constraints" (Ulen, 1999). The most simple form of a utility function under the rational choice theory is U=U(x,y). According
2.1.Single-period inventory model with probabilistic demand Increment analysis is used for determination of optimal order quantity of a single-period inventory model with probabilistic demand. In increment analysis “the how-much-to-order” question is dealt with by comparing the cost or loss of ordering one additional unit with the cost or loss of not ordering one additional unit. Notation used in this model is listed below: • Co : Cost per unit of overestimating demand. It represents the loss of ordering one additional unit that may not sell. • Cu : Cost per unit of underestimating demand.
Changes in quantity demanded is the quantity demanded for a good or product movement along the demand curve when price of a product changes occur. The factors of changes in the price wouldn’t affect the shift of the curve. If the movement is upwards along the demand curve, this means decrease in quantity demanded (contraction) occur. On the other hand, increase in quantity demanded (expansion) would make the movement is downward along the demand curve. Therefore, one of the main factor that affect the changes in quantity demanded for a vehicle is the price.