There are certain
reasons for the sudden decline of demand for our commodity.
1. Availability of
cheap substitutes: The main reason is the availability of cheap substitutes in
the market i.e. more substitutes is available in the market at low price. So
that people buy more of that commodity and because the demand for our commodity
falls. Substitution effect means change in demand due to substituting one
commodity for another. When price of a commodity falls the
cheaper commodities will be substituted in the place of dearer commodities.
Thus price of the commodity falls more of it will be demanded and the consumer
uses it as a substitute for high priced commodities.
2. Lack of
Advertisement: Lack of Advertisement is also a reason for the declining demand
for goods. In a highly competitive market advertisement is very important and
it also affect the change in demand. The main objective of advertisement is to
create additional demand by attracting more consumers to our product. So we
must advertise well to increase our demand of our product.
3. Technological
progress: Technological progress also affect demand for a commodity. Inventions
and discoveries bring new things in the market. So people will not demand older
things. So we must use more technological devices to improve the demand for our
product.
4. Lack of
demonstration: Lack of demonstration also brings out our commodity to a fall in
demand i.e. people get motivated or they were attracted by the demos given by
us and they will buy that product not because of their increase in income or it
becomes a cheaper product but their neighbour or relatives bought it. Tendency
of the consumer to imitate others will help us to increase the demand for our
commodity.
5. Free goods:
More Free goods are given by other producer to attract consumers and that will
affect the demand of our product. So we also gave more free goods than the
other companies.
Because of these
reasons we must forced to reduce the price of our commodity to increase our
commodities demand. For this we must know the different market conditions and
the factors affecting demand for a commodity.
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