Factors the Determine Demand and Price Elasticity to Guide Monetization Strategy

FACTOR S THAT DETER MINE DE MA N D & PRICE ELASTIC ITY Movement Along Demand Curve Demand Curve Shift Caused by change in price Caused by change in demand Q U ALIT Y Q UALIT Y P1 P2 PRICE РRICE Q1 Q2 Demand for Good X [Dx] depends on: 1. The Price of Good X [Px] 2. The Price of Complementary Goods [Pc] D = f (Px, Pc, Ps, y, t, E) 3. The Price of Substitute Goods [Ps] 4. Income [y] 5. Taste [t] 6. Future Expectations [E] Basic Low of Demand: 4 Price P V Quality Demanded QD V PAQD E Fluctuating future trends based on (1) Future price, (2) Future availability and (3) Future income Giffen Goods Status Symbol Goods Speculation Goods As prices of necessary Certain cohorts of buyers Customers will sometimes Px goods such as bread or will spend more on trends buy products now if they milk go up, spending to show their wealth anticipate not being able on luxury items goes and success. to afford them in the down. future. Pc - Complementary Goods: Goods that are dependent upon each other to be used (e,g., printers and ink cartridges). Ps Ps - Substitute Goods: Goods that are similar enough that they can be used interchangeably (e.g., brands of milk or butter). 2 Different Types of Income... Y a) Money Income - Normal earning expressed as wages/salary b) Real Income - Purchasing power of earning (what you can buy) Raises in money income don't always equate to raises in real income if the cost of living exceeds the raise in real money. If a consumer reacts positively to a specific taster or trend, demand will increase. The converse is also true. ROCKET SOURCE