IOM - factors influencing customer choice (economic and government factors)

Question 1

economic influences

Answer 1

Economic influences refer to the impact of changes in economic activity on customer behaviour.

They will impact consumer choice by altering

the willingness of customers to spend

how much consumers are willing to spend

Question 2

During a peak or boom there are

Answer 2

generally higher levels of consumer confidence and employment meaning people are more willing to spend.

Question 3

During an economic downturn or trough,

Answer 3

lower levels of consumer confidence and employment meaning people are less willing to spend

Question 4

government influences

Answer 4

Governments (at all levels including federal, state and local) can affect consumer choice both directly and indirectly through:

Government economic policies

Taxes and charges

Outlawing certain goods

Government laws

Question 5

economic polices of government

Answer 5

Governments have two main levers they can pull to impact the level of economic activity: monetary policy and fiscal policy.

The aim of these two policies is to either stimulate (increase) or contract (decrease) the level of economic activity.

This will make it more or less likely that consumers will have disposable income to consume goods and/or services.

Question 6

government policies

Answer 6

In the 2020-21 Federal Budget, the Federal Government expanded the Instant Asset Write-Off with an umlimited threshold

This means that a business can claim a full deduction on their taxes for any business-related asset such as laptop, car or machinery.

Businesses who sold these items suddenly had more customers….

Question 7

government taxes and charges

Answer 7

Conversely, governments can discourage the consumption of certain goods and services by imposing taxes and charges which makes these items more expensive.

Most obviously the Federal Government has done this with cigarettes in order to combat smoking rates amongst the population.

Currently the excise (flat charge) per cigarette is $1.1036

Question 8

outlawing of goods

Answer 8

Governments can also ban or outlaw goods through the existing powers given to the Australian Competition and Consumer Commission.

Bans can be placed on products and product-related services if there is a risk that they may cause serious injury, illness or death.