What is the demand for the goods you use every day?

Products that we use every day are classified into varied categories in economics. The demand for goods keeps varying due to many factors.

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Products are those items that are required by any common man in his day-to-day life making our life more simplified. Some of us are fine with using any type of product as long as it fulfills the job that we wanted to accomplish using that product. Some of us want organic products starting from clothing, vegetables, to everything. Every product existing from pin to the plane has a different type of demand.

Goods can be categorized as inferior, superior, necessity, substitute, and complementary. By using these terms we are not referring to the quality of goods but their demand in the market. Every type of good is different for each person say, for example, cup noodles may be an inferior good for a middle-class person but maybe a necessity for the person who struggles to have even one meal a day.

The way we use the goods remains the same but how much importance does that good has for us varies. Buying a Parker Pen for a person whose salary is INR 1 Crore per annum may be a normal good for him but for a person earning INR 1 Lakh per annum might be a superior good. Here I have mentioned the terms superior, inferior quite a few times, what do they mean? Let's see:

1. Normal Goods: They are the goods that are required by every person, they are also referred to as necessary goods. By using the term normal we here are not talking about the quality of the product but its demand. For example, necessities like milk, even when the price of milk rose to INR 100 from INR 17 in December 2015 during floods in Tamil Nadu, its demand did not decrease. Thus, no matter what the situations are, demand for normal goods persists.
2. Inferior Goods: These are the type of goods that consumers might demand less in comparison to normal goods. The demand for these types of goods will increase when there is a fall in the income of the consumer as they become comparatively affordable due to the cheaper price. For example, a person generally buying brown rice (which is considered healthier), suddenly buys white rice as there is a drop in her income. The inferiority of a good varies in usage.
3. Superior Goods: These type of goods are considered as luxury goods as they are bought only when the income of a consumer increase to the level of affordability of such goods. For example, having dinner at ITC Grand Chola or Radisson Blu might be expensive for a person with a monthly salary of INR 50,000. Another example can be buying gold jewelry.
4. Substitute Goods: They are the type of goods that are used in place of another good or goods that have the same use. For example, you might use an iPhone or an Android, both of their uses are the same, though the features and other inbuild requirements are different. You can either use butter or margarine both are used in a similar way. If the prices of Pizzas offered by Dominos are higher compared to what Pizzahut is offering then obviously you will go with Pizzahut as an option.
5. Complementary Goods: These types of goods are basically used in a combination of two, say for example, you cannot write using a pen unless it has ink. The demand for these types of goods is affected when the price of one of the goods varies. For example, if the price of petrol increases, people might prefer using modes of transportation which do not use petrol, or go for public mode or walking (good for health pals!).

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Being a human, the requirements of goods and services are never-ending for us. The need and demand for goods vary and there are some factors that affect their demand. What could be those possible factors? Let’s see:

1. Income: Income plays a very important role in the demand for goods. With an increase in income the demand for normal goods (necessities, for example, bread, milk, rice) increases. There are few goods whose demand might increase when there is a decrease in the income of the consumer like in the case of inferior goods. In cases of goods that are superior in nature for example the car Mini Cooper (quite an expensive one!), these goods are demanded by the richer population of consumers.
2. Price: This is the factor that actually decides the demand for a good. As per the law of Demand, as the price increases, the demand for a product decreases, and a decrease in price increases the demand. There are few exceptions, Giffen Goods are quite in contrast to the law of demand. For Giffen goods, the demand increases with an increase in price, by an increase in demand we can also infer that the demand remains constant even if there is an increase in price.
3. Price of related goods: In substitute goods, if there is an increase in the price of one of them, then that increase will affect the demand of its related goods, say, for example, if the price of Addidas shoes is higher than what you want then you may shift to buy Nike shoes which are comparatively cheaper at the time when you decide to buy shoes.
4. Taste and preferences of consumers: The demand for a product may vary with the changes in the taste and preferences of the consumers heavily as consumers are the ones who are utilizing the products no matter what type at the end of the day. The interests, taste, choice, preference of every consumer is different, one person may like mint chocolate, another person may not like that and might prefer white chocolate.
5. Status Symbol: The products which fall under this category generally have a constant demand. Let us understand this with an example, you want to buy a diamond ring, even though it is expensive you go for it as keeping a diamond ring gives you a high status, or say you buy a very expensive car say Jaguar or Mini Cooper or the dream car Tesla. There can be lists of examples of status symbol goods.

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The goods that we use every day and the services that we avail of may seem common to us, but buying them and selling them at the right point by keeping in mind all the factors is what builds a good economy. Producers and sellers use varied strategies to attract customers and we do get attracted by various offers. Demand is that part of economics that contributes at large to the development of an economy. It definitely has limitations but there is no economy with zero risks.

The GDP of any country defines how well a country is doing for its development but there are still some factors that are not included in the same and those other factors also contribute to the welfare of the nation. The demand you create for a product is the demand for economic growth.