Income level of each consumer is different, it affects the purchasing power of consumers to a product. the lower the person's income, the purchasing power of a product will decrease. However, this theory is no longer absolute because of the high society of consumer desires. for example, one can buy a smartphone that costs twice as much revenue by way of credit.
grouping or classification of various items based on income can be grouped into 4 groups, namely the inferior, essential goods, normal goods, and luxury goods.
1. Inferior Goods
demand for goods is usually done on low incomes. if higher income, diminishing demand for inferior goods. such as corn as a substitute for rice. If your business offers these products then have to be careful in determining the price. Low prices offered by the small gain value, and the consequences are if the increased revenue, decreased demand for these products.
2. Essential Goods
goods that have the essential nature or essential to the needs of each person. business matching and last a long time for the fulfillment of such goods, such as food stalls.
3. Normal goods
Called normal stuff because if increased due to the increase in revenue. this can occur due to:
*The increase in revenue that can increase the value of consumptive society
*Increase in income makes people more selective in buying an item, due to rising incomes, people tend to buy good quality goods.
4. Luxury Goods
goods are usually purchased by people who have high income, this group buy luxury goods for their basic needs are met. for example: gold, cars, diamonds.