How do the macroeconomic conditions as well as consumer income affect marketing?

Question

What will be an ideal response?

Answer 1

The economy pertains to the income, expenditures, and resources that affect the cost of running a business and household. Of particular concern at the macroeconomic level is the inflationary or recessionary state of the economy, whether actual or perceived by consumers or businesses. In an inflationary economy, the cost to produce and buy products and services escalates as prices increase. From a marketing standpoint, if prices rise faster than consumer incomes, the number of items consumers can buy decreases. Recession is a time of declining economic activity. Businesses decrease production, unemployment rises, and many consumers have less money to spend. Consumer expectations of an inflationary and recessionary U.S. economy are an important element of environmental scanning. Consumer spending, which accounts for two-thirds of the U.S. economic activity, is affected by expectations of the future. Microeconomic trends in terms of consumer income are also important issues for marketers. Having a product that meets the needs of consumers may be of little value if they are unable to purchase it. A consumer's ability to buy is related to income, which consists of gross, disposable, and discretionary components. Gross income is the total amount of money made in one year by a person, household, or family unit. Disposable income is the money a consumer has left after paying taxes to use for food, shelter, clothing, and transportation. Discretionary income is the money that remains after paying for taxes and necessities.