Business Advice: Understanding Consumer Behavior
Trying to Understand Consumer Behavior
Consumer behavior is no doubt a wide subject that incorporates and studies many aspects of the consumer and the purchase decisions he makes. I have already written about the consumer buying process which puts into perspective the processes or the different stages that are involved in purchasing a product by the buyer who makes certain decisions on whether to purchase or not after thorough evaluations and considerations on the general suitability of item satisfying the need it was meant for. Consumer behavior can be hard to understand and very complex.
But for now I will talk of the consumer behavior theory in general. The theory of consumer behavior attempts to put into consideration or cover consumers of goods and services and how they generally behave before, during or after the buying process and as such some common terms to explain the whole process are discussed below.
Preferences of Consumers
Buyers of goods and services or consumers to be precise have preferences or tastes when it comes to buying products. A commodity that appeals to a certain consumer may not necessarily appeal to another hence the difference in preference exhibited by consumers. A Dell computer may appeal to me as an electronics consumer but the same may not be true to another buyer who may prefer the Toshiba brand over the Dell brand. The utility or the satisfaction that a consumer derives from a certain brand may not be seen or realized by another who sees no utility or benefit in acquiring the product.
Do you think that you are a rational consumer?
Rational Behavior of Consumers
Money is no doubt what consumers use to buy goods and services they need and in reality it’s scarce in nature and a person may not have enough of it at any given time. Due to this scarcity of money consumers tend to be rational in their purchasing decisions. A consumer would spend his money on the best possible place or product that guarantees him utility or a sense of satisfaction. The rational behavior of consumer also means that buyers only purchase goods and services only when needed rather than wasting money on things that have no immediate use as of now. The consumer or buyer will do all he can to get the most out of the little money he has in possession in such a way that he feels satisfied about what his money has purchased for him.
Prices of Goods and Services
In a market there is demand as well as supply. Excess demand for goods means a reduction of goods and services available in the market and hence an increase in the price levels. The opposite is also true if the demand is low. As we have said before the consumers have little income or money in possession and hence should only make their purchase decisions on the strength of their wallets. In this case the consumer’s demand for the more expensive products tends to be lower and this may lead to fall in prices as a measure to counter the low levels of demand. When prices fall consumers are willing to purchase the products.
Money is scarce as we have said above and this means that a person may not be having enough or excess of it. While the money isn’t enough the demand for goods and services will ever remain high and it reaches a point where the consumer is in need of the commodity but the budget is constraint. There are too many things that are competing to be used for the little money that the person has and hence inequality in demand and supply.