Research on the impact of changes in consumer income on the demand for various consumer products was conducted by Unisa’s Bureau of Market Research (BMR) who measured the relationship between a change in the quantity demanded of a particular product or service and a change in real income. The need to predict changes in demand, especially in recessionary conditions, was at the core of the research which also took into account a number of factors including the tastes of consumers, their needs, values as well as their income.
The study, available from the Bureau of Market Research, P.O. Box 392, Unisa 0003, provides a sound basis for predicting and forecasting future demand patterns and included the following findings:
- Generally, the income elasticity of demand for food products shows that the proportion of income spent on food diminishes as incomes increase. However, the proportional decline among all foods is not equal with the decline more rapid among staple foods and less pronounced among refined foods.
- Low income households show a strong consumption focus on basic necessities such as food, beverages and socialising but show high income elasticities in products such as white bread, processed meat, baby food, new bicycles, bus transport and dining and kitchen furniture.
- Middle income households show a strong preference for processed and ready-made foods, sports and entertainment and investment in education and medical aid.
- Affluent households attach a high value to quality merchandise and spend more on books, photography, gardening and private schools as well as on SUV vehicles, housing and luxury goods.