Consumer choice: important decisions

Seminars, which discuss the best advertising strategies, are popular as never before. The fact is that the modern markets of developed countries are oversaturated. And you can sell the product, just somehow singling it out from the set of similar ones. Therefore, it is very difficult to bring a new product to the market , it is difficult to enter the sphere in which many manufacturers are already spinning. However, if this need exists, business owners take up books that describe what consumer choice is. Well, or hire those who read books like this at the university. So, more about the consumer choice.

This theoretical construction belongs to microeconomics. And he examines how preferences are related in the choice of services and goods and the general costs of consuming various goods. In general, the relationship between personal preferences, spent on consumption of money and the demand curve, has been considered in the economy for a long time and has been of great interest to economists for dozens of years. The consumer choice theory analyzes how consumers try to achieve a balance between preferences and costs by maximizing the benefits of the acquired goods. The needs are unlimited, but there are always budget constraints, so even the most impractical buyer tries to acquire what is most useful for him at the minimum cost.

Preferences are the desires of each individual to consume goods or services that in reality manifest themselves as a choice of real options depending on income (possession of wealth). Time is also important, appointed by the consumer in order to use the goods and services. Consumer choice and its features are on the border of the study of microeconomics and the psychology of consumption.

Researchers use models and graphics to predict the popularity of a particular product. Usually, the data obtained when selling a certain product of the same class is used. Scientists proceed from the fact that the consumer will strive to optimally use resources within his budget. What variables are used in such calculations? Price per unit, prices for very similar products and consumer wealth.

As the price rises, consumers will increasingly turn to other, cheaper alternatives. And this is understandable from everyday logic even to a person who has not studied the economy. After all, if a person can not afford one copy of the product, consumer choice will be directed towards a more inexpensive equivalent. This is called the substitution effect. But if the income grows, then the demand for goods generally increases, in this situation consumers will look for higher-quality, albeit expensive products. So the income effect is manifested .

Of course, consumer choice theory has its drawbacks. The point is in some assumptions that introduce inaccuracies in the calculations. For example, the theory under discussion admits that every person is aware of his preferences constantly when he needs to make a purchase. It is also inaccurate that if two goods are identical, then the consumer realizes them as absolutely equal, which is actually wrong. It is also automatically assumed that if the first goods are preferred to the second and the second to the third, then the first goods will be chosen rather than the third. As we see, economic analysis sees the customer as a logical and accurate machine. But there are other factors influencing the consumer choice.

Very interesting are the economists' arguments about the choice between consumption and rest. Consumption requires making money, that is, labor. And rest involves refusing to work and uninitializing your generally limited time work. Then every person makes a choice every day , and this choice is usually not easy. Such an application of the theory is interesting, understandable and people far from economics.