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Economics

Study Notes

Seasonal and Emotional Factors Affecting Demand

Level:
AS, A Level
Board:
AQA, Edexcel, OCR, IB

This revision note considers some of the seasonal and emotional factors affecting market demand

Seasonal demand

Seasonality refers to fluctuations in output and sales related to the seasonal of the year. For most products there will be seasonal peaks and troughs in production and/or sales

  • Demand for slippers peaks in the run up to Christmas
  • Demand for plants at garden centres is linked to the planting season
  • There is high demand for decorating materials before the Easter weekend
  • High street retailers such as jewellers may sell as much as 80-90% of their products over Xmas

Social and emotional factors affecting demand

  • Traditional economic theory focused heavily on objective factors affecting demand such as price and income. More recent developments in the subject, especially behavioural economics, gives more weight to psychological and social factors that affect our preferences and choices in markets.
  • There are many social factors affecting demand and this means that our spending decisions are rarely taken in isolation. We are strongly influenced by the choices of other people especially when we share the same social groupings and networks. Herd behaviour can be a powerful force in markets
  • Emotional factors take into account that we may make different decisions when in “hot” or “cold”states, our emotions may lead us to make short-term spending choices that might not be made in a different emotional frame of mind.

Social factors:

  • Social awareness e.g. awareness of health risks from smoking, gambling
  • Social norms - changing norms of behaviour e.g. the falling demand for recycled bags used in supermarket
  • Social pressures e.g. peer pressures affecting demand for legal highs & other drugs
Emotional factors:
  • Emotional arousal can affect the demand for health insurance after major incidents
  • Binge drinking and eating at times of personal insecurity
  • Demand for products such as football season tickets and antiques also has a strong emotional attachment

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