Factors of Consumer Behaviour and their Effects on the Demand Function
Factors of Consumer Behaviour
Running head: FACTORS OF CONSUMER BEHAVIOUR
Factors of Consumer Behaviour and their Effects on the Demand Function
Introduction to Microeconomics A
16 March 2010
Either in marketing subjects, microeconomics, or even in daily newspapers, one tends to see the word “Consumer”. One of the most important aspects of every business is the consumer, or one who utilizes their product. From the consumers comes the concept of consumer behaviour. When talking about that one means the decision processes and acts of people involved in buying and using products (Fahy & Jobber, 2009). Businesses need to understand consumer behaviours whilst making their products in order to get a sufficient amount of demand. In other words, firms need to create products based on customers’ demands and especially concentrate on maximising their utility. The first concept of economics that links to consumer behaviour is demand. The demand curve is what determines the quantity of a certain product a consumer needs (Sloman, 2007). Consumer behaviour is one of the main factors that affects the demand curve based on people’s incomes, tastes and preferences, and of course social factors. This essay will therefore highlight the different factors of consumer behaviour influencing the demand curve, such as the socio-cultural factors as well as the psychological factors.
The demand function is determined by the price of the product and any other included products’ prices, introduced to the consumers as well as their income, sociological f actors, and tastes and preferences (Sloman, 2007). It is discussed by economists that any change in those factors would either change the slope of the demand curve, if the changes are endogenous; or will shift the curve either to the right or left if the changes are exogenous. What is fundamental to know is that those changes all depend on consumer behaviour. Let us take the example of John Frieda hair products. If one is used to using this product is one thing. It also means that certain individual can actually afford to buy it. However, if his income level decreases, his behaviour towards buying the product will change. He would rather become hesitant in making the choices of either cutting down his other expenses and carry on using John Frieda hair products, which would not shift the demand curve; or he would just switch to another brand that will offer the same type of product for a cheaper deal. When a consumer stops using a specific product because he cannot afford it due to his low level of income, he is most likely to switch to a cheaper product (Kauko, 2006). This is why businesses have to take a high consideration to the general incomes of people. If they want more demand, they have to make products which will satisfy consumers. Consumers’ behaviour towards the prices of the products will definitely impact the demand curve. Personal tastes and preferences also impact consumers’ behaviour. If consumers believe highly of a product, no matter how much the price will change, their tastes would not change. However, if in their personal life they want to make a change in consuming something different or choosing an alternative to change from the routine, then the demand curve will change its slope or shift (Kauko, 2006). Social factors are also part of how consumers generally behave. One usually buys products based on what they heard about them. For example, as soon as Mc Donald’s was graded poorly on healthy food, general consumers started repelling the company. Parents were teaching their children not to eat their products in fear of their children risking obesity. A major part of the population was concerned about the food Mc Donald’s was offering. To end this drastic consumer behaviour trauma, Mc Donald’s introduced healthier options in their menu such as salads and fruits, which may not have convinced many, but at least people spread the word and consumers could make healthier choices (Fahy & Jobber, 2009). These types of decisions are made by businesses in general in response to consumer behaviour. Companies therefore make their products based on consumer behaviour. There are various factors that are considered in this area such as socio-cultural and psychological factors.
