The Marketing and Economics in Consumer choices

"What does the consumer want?" is the question to which most of the corporates try finding answers to.Gone are the days when marketing was product-oriented ,nowadays the prime focus is only on customer satisfaction in order to boost sales and profits.Consumer choice has always been a psychological phenomenon and a study regarding this will prove to be useful only under restricted conditions.As it is a theory involving individuals,it falls as a major topic in the field of microeconomics.As we always say that the consumer is the king of the market ,they have all the right to make their own choices.In economics we go about finding out the satisfaction that a consumer derives from the consumption of different commodities.This theory has certain assumptions regarding unbiasness,fixed goods,equal satisfaction among goods,etc.which has to be kept in mind before establishing the field of study.

Understanding consumer preferences.

Generally,as I mentioned before consumer choice is a human aspect which cannot always be same and differs from person to person.It is a psychological aspect that changes anytime.Given,two beer brands -Kingfisher and Tuborg, it is difficult to say which a consumer might opt for. Several reasons persuade the consumers to choose them.One of which is smart sales promotion techniques-discounts,coupons,etc.In economics we use the term,'rationality' to escape any questions regarding the practicability of  theories in the real world.We cannot also rule out the study simply because of the base it provides and it is practical also to some extent. Behavioral economics has taken a all new turn to condemn the practicability of theories and bringing out theories that would be feasible in the present world.

In the micro-economical  study of consumer choice,the term utility plays a vital role."Utility" by its definition means the want satisfying power of a consumer.In simpler terms it is the amount of satisfaction that a consumer derives from consuming a commodity.This is basically the most common term we use in explaining the theory.Utility is of two types:-cardinal and ordinal utility.

Cardinal Utility-It states that utility can measured in numbers(utils). In other words, it is a quantitative method. The product which gives the consumers higher satisfaction is assigned higher utils. This approach is also known as Marginal utility approach.

Ordinal Utility-It is quite opposite to the cardinal approach, stating that utility derived from commodities cannot be measured but they can be ranked. The product that gives the customer higher satisfaction is ranked higher than the other products. This is a qualitative method. It is also called as the Indifference curve analysis.

Sales promotion-Finding out the consumer choices.

In modern marketing, it is the corporates who decide what the consumers want simply because of their grand sales promotional strategies. Other strategies and additional services prove to increase their sales as well. Products are getting innovative by age.Consumers want diversified products in the market.Discounts, coupons,brand equity,brand loyalty prove to be as effective as well.For instance, In the mobile market, there is a clash of umpteen number of brands . Apple iPhone despite having higher prices does exceptionally well in the market. A larger part for its success is definitely handed over to its brand value over the years. In the real-world certain times,the price of a product doesn't  really come into picture while choosing products. The very picture above is an example of a successful product promotion strategy which definitely will have an impact on the sales of cocktails in Havana bar.

But in the consumer choice theory, we do not bother about other aspects other than the price.Another constraint here is that we have fixed amount of goods and we try bringing about optimum combination between the goods by simply trying out various combinations of the given goods . In contrast to the real world, in economics we understand consumer choices with certain assumptions such as budget constraint, fixed goods, etc.

Here, let us take an example of the Ordinal Approach. For this the Indifference curve proves to be very vital. The Indifference curve simply shows different combinations of two goods that give equal satisfaction to the consumer. Take the example of fries and burgers:

The above diagram is a indifference map (collection of indifference curves). The level of satisfaction on each IC is the same. It shows various combinations of burgers and fries that the consumer can purchase with his given budget where all the combinations on the curve give him equal satisfaction and he is indifferent among them.A rational consumer will prefer a larger quantity of goods. Thus, here IC3 is preferred over other IC's simply because it has larger quantities of both fries and burgers.

Conclusion 

The study of consumer choices is very much abstract in nature.But the consumer choice theory serves as a base to the study of consumer preferences and decisions. Therefore, it plays a vital role in micro economic theory and commerce as well. Understanding the basics provides more insights into what the individuals desire and prefer among other choices of products.One of the major right to the consumers is the 'right to choose'. Remember that you are a king and the market caters to your needs. Next time before buying try to find out the utility of various products you purchase and choose the right combination among the given goods.