Which factors influence the market

Factors influencing market demand

Changed consumer behavior

There are shifts and movements in the demand curve, which graphically shows the relationship between price and demand. Movements take place when only the price changes, shifts occur when the framework conditions, the so-called influencing factors, change.

External impact on the demand situation

If the price changes, then the amount of demand also changes. This creates the movement along the demand curve, so depending on the change in price, the amount of demand increases or decreases. The shift along the demand curve, on the other hand, occurs when the influencing factors change.

There are many influencing factors, the most obvious example being income. If you have more income, you are no longer interested in some goods and want to purchase higher quality products. This of course also changes the amount of demand for a certain good. But if you get less income, the demand for goods also changes, but in the opposite direction because you are forced to save money.

Other factors that can significantly change demand are market trends, changed preferences, competing products that have come onto the market or social changes that influence the market and thus also the demand of the individual.

This means that there are a number of different parameters that can change demand despite the constant price. Some factors have hardly any effect in certain situations, while others change demand almost dramatically. That depends on the type of goods as well as on social changes, which are sometimes noticeable, but sometimes not to be expected.

Example corona crisis 2020

A dramatic example of how quickly the market can change was shown in spring 2020 when the corona virus forced people to stay at home. Before these exit restrictions were introduced, there were genuine hamster purchases, with noodles and other types of pasta, and above all toilet paper, being bought in large quantities. That was not to be expected and is therefore a defining example of influencing factors that can massively change demand - although income had not changed at all at that time, and neither did supply.