Consumer sovereignty therefore is important in the role of determining patterns of production in an economy. Through the operation of consumer sovereignty, consumer income levels determine the types of production that occur. As an economy becomes more wealthy and income levels rise, demand for luxury good also rises as well as the production of luxury goods. Thus, as an economy experiences an upturn and consumer incomes rise, the production of luxury goods will increase. Similarly, the production of these items will decrease in economic downturn.
There are four main factors that influence consumer choice. They are personal factors, economic factors, social factors, and marketing.
Personal factors influencing consumer choice are about the consumer’s own preferences, wants and needs. An individual has his/her own personal tastes or preferences and this influences the choices they make when the consume income. Personal factors also include personal wants and needs. An individual will purchase necessities rather than wants, as necessities are essential.
Social factors include what other people think of the product, and the influence they have on an individual to purchase goods and services. Friends and family may also influence what an individual consumes their income on. Social factors also include trend, as in whether or not something is fashionable or in trend, age and gender. A teenage female is more likely to purchase a fashionable piece of clothing, rather than a retired man.
Economic Factors include the level of income and availability of credit. And individual with a higher level of income is more likely to spend on luxury goods, than a person on a lower level of income, who might only spend their income on necessities.
Marketing refers to advertisements that a consumer may be exposed to which in turn will influence a consumers choice. Advertisements use different strategies to motivate consumers to buy particular goods and services.
All these factors contribute to the influencing of consumer choice. Consumers choose what products to buy, and therefore determine patterns of production in an economy.
