Incentives: A motivation!

An incentive is a reward/benefit that persuades and motivates people to act towards a product. Incentives play an important part in our economy. It decides and analyses where the market will lead.
As we know rational people think at the margin, they resolve their issue of buying by estimating the costs and advantages of two or more various products.
For example, if the cost of coffee increases in the market, people will decide to drink more tea and less coffee. At that same time, coffee producers will engage in producing more coffee because they will earn more profit by selling it at a higher cost.
An increase or decrease in a price of a good changes the behaviour of the buyer as well.
Incentives change the buying habits of the buyers. They might even switch to inferior quality products just to save an extra penny. But on the other hand they can even buy a luxury good at a very low price!
A voucher, gift card, discount coupons are few things where people respond towards a product. Certain brands design these in such a way that to avail the incentive people have to be connected with the brand for a long time. Some incentives are availed only after a certain amount of purchase. This benefits both the parties.
Incentives do have a direct as well as indirect effect. Direct is on the user and investor where as indirect effects the internal and external framework. Some incentives are regulated by government like the change in oil prices.
Be it direct, indirect or government, people are tempted by incentives and can change their habits for it. People are so responsive and motivated towards incentive that businesses are now obligated to provide incentives and schemes to survive in the economy.