Giffen good

Examples of Giffen good in the following topics:

• Elasticity of Demand

  • Only goods which do not conform to the law of demand, such as a Veblen good and a Giffen good, have a positive PED.
  • The PED of a good can also be used to predict the incidence (or "burden") of a tax on that good.
  • A number of factors can thus affect the elasticity of demand for a good:
  • Breadth of definition of a good: The broader the definition of a good (or service), the lower the elasticity.
  • Identify the key factors that determine the elasticity of demand for a good

• The Demand Curve

  • Demand is the willingness and ability of a consumer to purchase a good under the prevailing circumstances.
  • The demand curve usually slopes downwards from left to right; that is, it has a negative association (two theoretical exceptions, Veblen good and Giffen good).
  • The constant "b" is the slope of the demand curve and shows how the price of the good affects the quantity demanded.
  • Non-price determinants of demand are those things that cause demand to change even if prices remain the same—in other words, changes that might cause a consumer to buy more or less of a good even if the good's price remained unchanged.
  • However, demand is the willingness and ability of a consumer to purchase a good under the prevailing circumstances.

• Unsought Products

  • Life insurance is an example of a good that is often seen as a sought good because awareness of its benefits has grown.
  • Unsought Goods are goods that the consumer does not know about or does not normally think of buying.
  • Once the consumer is well-educated about the product, the good goes on to become a sought good.
  • Even though it is a classic example of an unsought good, it is quickly growing into a sought good.
  • This was to prevent the good from becoming an unsought good.

• Shopping Products

  • Convenience goods are those that require little effort on the part of the buyer, while shopping goods require research and comparison.
  • Specialty goods will be discussed in the next section.
  • Vending machines typically dispense convenience goods.
  • Shopping goods do not necessarily have to be distributed widely.
  • An example of a shopping good is a car.

• Services as Products

  • Services represent an integral part of many products and the correlation of goods and services is represented on a goods-services continuum.
  • Therefore a taxi cab driver provides both a good and a service, so he is providing a product.
  • No longer are goods considered separate from services.
  • It is this interconnectedness between goods and services that is represented on a goods-services continuum.
  • A taxi cab driver provides both a good and a service, so he is providing a product.

• Specialty Products

  • Specialty goods are those considered unique by the buyer, who will go to great lengths to get them.
  • Specialty goods represent the third product classification (after convenience and shopping goods).
  • Price is not usually the primary factor in consumer choice of speciality goods.
  • Whether a good is a shopping or a speciality good depends on the consumer's socioeconomic background.
  • Speciality goods have higher profit margins and higher prices relative to convenience or shopping goods.

• Social Classes

  • Marketers should understand that a person's social class will have a major influence on the types and quantity of consumer goods purchased.
  • Generally, the rich have the ability to purchase more consumer goods than those with less income, and those goods are of higher quality .
  • There is also a distinction in the type of goods purchased.
  • Material goods often take on major symbolic meaning for this group.
  • Social class has a profound effect on the types and quantity of consumer goods purchased.

• Defining Consumers

  • A consumer is a person (or group) who pays to consume the goods and/or services produced by a seller (i.e., company, organization).
  • In the fields of economics, marketing and advertising, a consumer is generally defined as the one who pays to consume the goods and services produced by a seller (i.e., company, organization).
  • A consumer can be a person (or group of people), generally categorized as an end user or target demographic for a product, good, or service.
  • Any product, good, or service that is developed must have a target market in mind, in order to be effectively marketed and sold.
  • Marketers are paying close attention to consumer behavior or how potential buyers act when purchasing goods or services for personal consumption.

• Value of Retailing

  • Retailing goods or services goes back to the beginning of recorded history.
  • It creates jobs for the people who supply the raw materials and to factory workers who actually make the products, for the people transporting goods to the marketplace, the construction companies that build the stores and malls and for an entire service sector that maintains goods purchased by individuals.
  • Retailing second hand or used goods, it enables consumers to purchase goods at deeply discounted prices or to borrow against and using the value of the product as collateral against a cash loan.
  • In most cases the price paid for the goods or the goods donated are often recognized as a tax-deductible item.
  • E Bay changed the way second hand goods are sold and bought

• Defining Product

  • A product is any good, service, or idea that can be offered to a market to satisfy a want or need.
  • In manufacturing, products are purchased as raw materials and sold as finished goods.
  • Goods are a physical product capable of being delivered to a purchaser and involve the transfer of ownership from seller to customer.
  • Most goods are tangible products.
  • A soccer ball is an example of a tangible product, specifically a tangible good.