Economics Of Christmas In America Essay

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Introduction

The economics of Christmas is important because Christmas is typically a peak selling season for retailers in many cities and states in the U.S. Sales usually increase dramatically as people purchase gifts, decorations and supplies to celebrate. In the U.S, the “festive shopping season” starts early as October. It has been calculated that a quarter of all personal spending takes place during the festive season in U.S. The decision to raise or reduced prices during the festive season is a tough one making it a subject of argument which comes with many implications to the business. The decision whether to raise to lower prices comes in hand with the decision on how to accomplish the change and

The good effects include;

Higher profits will be realized as the season comes hand in hand with demand. By acquiring this the business would have achieved its main objective, that is to make profits.

By increasing prices, development costs would be recovered. In case the company had spent a good amount of money on product development, this will be the only means to recoup those costs.

Increasing prices of the company’s products, increases the quality perception. Quality is a key factor that customers consider when making purchasing decisions. Understanding that price is a measure of quality for many buyers. If the company increases the prices during the festivals, it would boost the market perception of their products.

The not good effects would include;

The company will probably suffer from sales drop. As the Law of supply and demand states, increasing the prices for goods and services reduces their demand while their supply increases. Customers will prefer buying from the company’s competitors where the prices are relatively cheaper. By this company’s sales will be

Consumer satisfaction is important because it provides marketers and business owners with a metric that they can use to manage and improve their businesses. Hence increase in prices damages the already established consumer satisfaction. Harris, L. and Gurel, E., (1986) If the business would go for the argument of reducing prices of its products, the good effects will include;

Increased sales volume. The law of demand and supply states that demand increase as prices decrease. The business will witness higher sales volume as the reduced prices will attract more customers to its products.

By lowering prices of the outputs, the business will increase satisfaction of its customers. By boosting customer satisfaction, the business is able to absorb and retain the customers of its products for a long period of time

The business should not take the idea of lowering prices lightly. This usually comes with a lot of disadvantages to the business which include;

Reducing the prices leads to excess demand which will exceed the company’s total supply of its products. This makes the business incapable of satisfying the high market