Defining Important Socio Economic Factors Affecting Businesses Today
Socio economic factors are important characteristics which mostly influence consumers. These factors are associated with the quality of life and determine the behaviors, tastes, preferences, attitudes and lifestyles of people living within a society.
Socio economic factors have a high impact on businesses, whether big or small. This is because the consumers are often at the heart of businesses and tend to affect growth of all ventures. There are many socio economic factors that business persons need to look out for in order to excel and compete effectively in an ever changing market.
Income capacity of consumers determines how much they can spend on certain products. If citizens in a country have access to high incomes from employment and personal business ventures, then they are more likely to spend on luxurious products. This is because they can easily afford the products and also have a taste for good things. On the other hand, low income earners may not be able to afford basic commodities, let alone the luxurious products. The struggle to meet their basic needs may blind these consumers from purchasing luxurious products.
It is thus essential for a business person to consider the income capacities of the consumers before setting up the business. This factor should affect where the entrepreneur sets up shop and the target clients he chooses. For high end products, an entrepreneur should look for a shop in an up market area with access to high income earners. For basic commodities, an entrepreneur should look for cheap suppliers and set up shop near the low income earners.
The occupation of consumers is largely related to the income they earn. Low skilled laborers who work in menial jobs cannot earn the same as corporate managers. The differences in occupations more often than not determine the income gaps of the consumers.
As an entrepreneur you must carry out research on the occupations of your consumers. This should influence your decision to venture into certain businesses with a specific target at consumers who have good occupations or lowly jobs.
Education levels influence the type of occupation a person can get and ultimately their income level. Consumers with higher education tend to be skilled and also have better jobs and incomes as compared to those without education. Education is determined by the opportunities presented to the consumers and can influence how much a consumer can afford.
In addition to this, the educated consumers have different tastes for products as compared to the uneducated ones. The educated consumers are not only more conscious about the contents of products but may also come off as demanding as compared to the less educated ones. An entrepreneur may have to work harder to fulfill the demands of these consumers as compared to when dealing with less educated folk who are less demanding.
Economic growth and development of a country can also have an impact on the social status of its citizens. Emerging economies such as China and India have proved that if a country experiences high economic growth then the citizens may have better access to incomes and also the middle class and upper class may grow. This may also attract more investors into the country and increase employment rates. Inevitably positive economic growth rates will increase spending and help businesses to grow.
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