Consumer buying behaviour has always been an important consideration for the business analysis.The consumer preferences and tastes define the structure of the consumer based business.The consumers can be rational or biased…
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The consumers can be rational or biased. The biased consumers are those, who make their decisions on the basis of their influenced directions. The influenced directions means the product that influences their decision making more without considering the key factors of usage may lead to biased decision. On the other hand, rational consumers are those who take decision after complete analysis of the situation and their decisions are logical and justified. Therefore, all of their decisions are also considered to be the best of their wisdom within provided options. Consumers are usually thought to be free of any undue pressure and all kinds of confusions. Therefore, their decisions are analyzed in the given circumstances. For this purpose, many theories and notions have been developed. The famous demand and supply curves are, probably, the best illustrations of these concepts. On the other hand, there are few other things as well, that cause the buyers to make a decision of consuming a certain product or service. These factors affect the purchase decisions of the buyers as well as the production decision of suppliers of the same product simultaneously because more sales mean high production and supply of goods in markets. Therefore, it can be said that these are the theories of both, demand and supply. Also, these provide about the decision making choices of both, the buyers and the producers as well. 2. Classical Consumer Theory Classical consumer theory revolves around the interrelationship between consumers’ choice based upon their desires and consumption expenditures. It means that a consumer, prior to making a decision about buying a certain product or service, is rationally concerned with the preference of his choice and the potential expenditure that is likely to be incurred through that decision (Hoyer and Maclnnis, 2008, pp. 32). This is because of the fact that, a rational decision making is based upon all the factors to be kept under consideration. This includes liking, disliking, utility, preferences and expenditures of that choice. However, this relationship is very important to illustrate the patterns of personal preferences, demand and supply curves as well as consumption. This kind of theories is best to ascertain the equilibrium between the likely expenses and preferences as far as the utility of the goods and service are concerned within specific budget limits. These budget constraints are those that drive their personal preferences in order to make a purchase or not. That is why it is said that these budget limits have a lot of weightage. There is another factor that is involved in this buying decision that is utility of a product of service. Greater the utility, more preferable it is. Therefore, as described above, the equilibrium between affordability, available funds for that product of service, preferences and desires are those things which make a decision possible on consumer’s part. On the other hand, greater the demand, more supply is likely to be made by the suppliers and manufacturers of the goods in order to earn maximum out of this situation. It is assumed, in this situation, whatever quantity a consumer wishes to buy is available in market. There is no shortage of goods or services that a consumer prefers and there is no shortfall at all (Jehle & Reny, 2009). 3. Framing Effect- Behavioural Economics Framing effect refers to the way a particular product or service is presented to the potential consumers. This is all about the perception how people get it. These are usually the sales and marketing campaigns of the businesses that create the image
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