Question

Effects on purchasing power of a customer due to discount introduction

Answer 1

Discount reduces the cost because of which buyers disregard their necessities and think just about luxurious things or things which are not vital to them.

Discount for an item makes it less expensive than previously, inciting individuals to buy a greater amount of it than previously. This occurs as dealers and money related establishments offer all the more such items amid the festive season.

The buying influence of the shopper increases when they get markdown as their cash gets them a greater amount of the good at lower prices. At the point when a buyer gets the discount, it implies that now he buys a good by giving less cash and in this way having a greater amount of his extra cash intact.

Answer 2

The purchasing power of a customer depends on:

i. The amount of money in the buyer's hand.

ii. The price of the products being sold.

1. If a product is sold at a discount the purchasing power of the customer will increase because he will be able to buy more things with the same amount of money. For example, if a person has Rs. 10, he can buy 4 pens worth Rs. 2.50. But if there is a discount and the price of the pens is lowered to Rs. 2 the person can buy 5 pens.

2. If there is a discount the customer may indulge in excessive buying.

3. He may disregard the necessities and spend more on luxury items.