Demonstration effects are effects on the behavior of individuals caused by observation of the actions of others and their consequences. The term is particularly used in political science and sociology to describe the fact that developments in one place will often act as a catalyst in another place.

What is demonstration effect in business?

Demonstration effect refers to the consumption habit of the people to imitate the consumption trends adopted by other people.

How does Demonstration affect demand?

Demonstration Effect: In the case of demonstration effect, law of demand is not applicable. When a consumer starts to use a commodity in order to imitate others, it is called demonstration effect. In this case, if price of a commodity rises, its demand will also rise.