General and specific factors influencing demand. We will discuss the major factors that influence demand for a good or service. 

1.      Price of the Product

Other factors remaining constant, the demand or sale of a product is inversely related to its price (own price of the good or service). It implies that, when the price rises, the quantity demanded or sold decreases and when the price falls, the quantity demanded or sold increases. 

2.      Purchasing Power of the Consumer

The quantity demanded usually increases with an increase in income or purchasing power of the consumer. This is so in case of normal or superior goods like refrigerators, education and housing. However, there are some goods and services which are consumed less with an increase in income. These goods are known as inferior goods, like bajra, hamburgers and potatoes. The consumer decreases their consumption since he can now afford to purchase goods of better quality A knowledge of relation of the good produced by the firm to the income of the consumer helps in estimation of current and future demand. 

3.      Preferences and Tastes of the Consumer

Goods and services in fashion have more demand than goods that are out of fashion Consumer may purchase a good which is popular and discard the old one. Like in many homes, interiors are changed with a change in fashion trends. Various trends in the past two decades have supported growth in demand for new foods (low calorie food, fast food and diet food), new electronic products (computer, CDs and Laptops) and new recreation services (video parlours, bowling alleys and bungee jumping). Appendix 3.e shows the importance of customer tastes and preferences in the development of a product.

Socio-cultural factors like customs and religious practices determine the preferences and tastes of the consumer. For instance, in India, demand for non­-vegetarian food decreases during Navratras. 

4.      Price of Related Goods

When goods are substitutes, a fall in price of one leads to a fall in quantity demanded of its substitutes and vice versa. For example ink pen and ball pen and different brands of a good (like various brands of soaps and cars). Curve Os in Fig. 3.2 shows that a significant increase in price of Zen may lead to an increase in demand of Santro,

Complementary goods are often consumed simultaneously. For example tea and sugar and car and petrol, A pair of goods is complementary if an increase in price of one leads to a decrease in demand for the other. Other things remaining constant a fall in price of cars will increase the demand for petrol.  

5.      Promotional Activities  

Advertising and promotional campaigns have a profound impact on consumer tastes and preferences, It has been observed that demand for a good increases with an increase in after sales service, pre sales service, demonstrations, advertisements and other related activities. 

6.      Prime Population

The segment of population which consumes a particular good or service is called as prime population. A growth in the prime group has a favourable influence on demand. But demographic changes affect demand avera long period of time. 

7.      Price Expectation

Future expectations of an increase (decrease) in the price- of a good or service may cause current demand to increase (decrease). In markets for financial instruments (example stocks, shares, bonds, treasury bills etc.) as well as agricultural commodities and precious metals, expectation of future price changes influences the market demand.

Other or specific factors like credit facilities, seasonal changes and changes in macroeconomic policies also have a significant effect on the 'demand of a product in case of durable goods, factors like availability of credit facilities, after sales service, brand loyalty and product features play a crucial role in determining del n and. 

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