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1. The demand for most products varies directly with the change in consumer income. Such products are known as
(a) Normal goods
(b) Prestigious goods
(c) Complementary goods
(d) Inferior goods
(e) Substitute goods.
Correct answer is option (a )
For normal goods, an increase in real income increases the demand for products, other factors remaining the same. Products and services with income elasticities above one are called income elastic. For example food items, clothing, housing, travel, etc.
The demand for certain products and services reduces when there is an increase in income. These are known as inferior products having negative income elasticities. Examples of inferior products are low-end brands of household products (black and white TV, and coarse cereals for example). A product or service whose income elasticity is greater than one is called a luxury/ prestigious good For example, foreign travel has an estimated elasticity of about 3, indicating that it is a luxury service.
Complementary goods are products that are consumed together. For example, car and petrol, tea and milk or shoe and polish, etc. In this case, if the price of one product goes up the demand for the other product decreases. A substitute product is one that provides the same level of satisfaction as the product already being consumed by the consumer. For example, tea and coffee, chicken and meat, etc.
2. Practical Questions
Principles of Marketing
1. What is Channel Ownership ?
Ans. Channel means the bridge from manufacturer to the customer/consumer. Channel Ownership could be either :-
1. Backward Integration :-
acquiring suppliers or otherwise increasing level of self supply For Eg :- Reliance Retail has his team for backward linkages which carry out procurement of F & V, Fresh, processed foods.
2. Forward Integration :-
expanding a business so it directly distributes its products. For eg :Reliance Retail have come up with its own stores to distribute its products directly.
2. What is the term Title in Product & Title
Product and its Title :-
The world Title means "Ownership".The one who owns the product, be its wholesaler, retailer etc.
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