How Do Economic Forces Influence Our Purchasing Decisions?
What Goods and Services Are Most Important To You?
We all have basic needs and wants, and have to pay for the necessities first like our mortgage or rent, electricity, heat, and groceries. We all have bills to pay and we are supposed to pay the bills first, and then with whatever is left over we can decide what we want to buy or purchase or do with it.
If a lot is left over, we will splurge on eating out and entertainment. If only a little is left over we will be more frugal with it.
When faced with a decrease in disposable income we have to make tough purchasing decisions, and all of the non-essential spending is always the first to go. This also results in a higher demand for essential items such as real grocery food, and even as we are seeing today items like toilet paper, bleach, lysol, and hand sanitizer, which are specific needs to the economic crisis we are currently facing. People will go out and purchase necessary items that they feel they need to survive.
We are living in an unprecedented time of the coronavirus becoming an economic force that has greatly influenced purchasing decisions in the past six months. People have lost income if their place of employment has closed or let them go, and they are unsure of when or where the next money will come from.
Economic forces can be a snow storm like the blizzard of ‘78 when people were stuck in their homes for a long time, or a virus that has us all quarantined. It can be a stock market crash or a new president taking office. It can be a mad-cow disease that affects all the beef, causing people to purchase more pork, chicken or turkey instead.
When people are unsure of the future it affects their purchasing decisions.
Our purchasing decisions completely change when outside forces we can’t control cause us to rethink exactly what we are buying and spending our money on. Each of us have different tastes, needs and wants, so our choices of what we give up and what we deem necessary will be different. It might be difficult for me to go without a coffee pot, but not for someone who does not drink coffee.
Alternately, when faced with an increase in income, people will spend their money on more of the unnecessary wants and that is when industries like entertainment and sports see an influx of customers. I am fairly confident that when the coronavirus crisis is over, our restaurants, bars, movie theaters and bowling alleys will be in high demand. But I wonder if any of us will be able to afford the prices they will have to charge.
