The Effect of Price Elasticity of Toyota on Consumer Consumption Essay

The Effect of Price Elasticity of Toyota on Consumer Consumption - Essay Example 5 contains results, discussion, and conclusion but these three documents are still subject to major modifications depending on document 2 and level of analysis required. Background to Research Problem The automotive industry is among the most competitive industries in the world. Consumer decisions to purchase vehicles are often influenced by a wide array of factors that impact the industry. These include, safety, comfort, fuel efficiency, and price (Jeihani and Sibdari, 2010:1). Though factors such as fuel efficiency are certainly critical in consumers buying decisions in the current economic environment where gas prices frequently fluctuate, research shows that though the demand for gas efficient cars such as the hybrid cars have been high, sales have not picked up as expected (Read, 2012; Tuttle, 2012). This is mainly attributed to the high prices at which these vehicles are purchased, and therefore implies that price is a core contributor to demand and consumer purchase decisions when it comes to purchasing a car. Understanding how price changes alter the quantity demanded is crucial to decision makers as they can be able to understand how responsive consumers would be to certain price changes (Jazayeri and Jazayeri, 2011: 102; Rossi, 1995: 17; Bernstein Research, 2007). Price elasticity is an important element when introducing products in a competitive market (Hauser, 1998). As quoted from the book Principles of Economics by Alfred Marshall (1920), â€Å"the elasticity (or receptiveness) of demand in a market is significant according as the amount demanded increases much or little for a given fall in price, and diminishes much or little for a given rise in price" (pp. 15). Parkin, Powell, and Matthews (2002) noted that the following affect the elasticity of price for... This research will begin with the statement that the automotive industry is among the most competitive industries in the world. Consumer decisions to purchase vehicles are often influenced by a wide array of factors that impact the industry. These include, safety, comfort, fuel efficiency, and price. Though factors such as fuel efficiency are certainly critical in consumers buying decisions in the current economic environment where gas prices frequently fluctuate, research shows that though the demand for gas efficient cars such as the hybrid cars have been high, sales have not picked up as expected. This is mainly attributed to the high prices at which these vehicles are purchased, and therefore implies that price is a core contributor to demand and consumer purchase decisions when it comes to purchasing a car. Understanding how price changes alter the quantity demanded is crucial to decision makers as they can be able to understand how responsive consumers would be to certain price changes. Price elasticity is an important element when introducing products in a competitive market. As quoted from the book Principles of Economics by Alfred Marshall, â€Å"the elasticity of demand in a market is significant according as the amount demanded increases much or little for a given fall in price, and diminishes much or little for a given rise in price". Parkin, Powell, and Matthews noted that the following affect the elasticity of price for a certain commodity: availability of substitute goods; percentage of income; necessity; duration; brand loyalty; and who pays.