Economic buyer theory

February 6, 2016
Chapter 5 Reflection

As the discipline of consumer behavior has developed, various theories have contributed to understanding behavior. These include economic theory. Economists were the first professional group to offer a theory of buyer behavior. The Marshallian theory holds that consumer purchasing decisions are largely the result of “rational” and conscious economic calculations, i.e., the individual seeks to spend his/her income on goods that will deliver the most likely utility (satisfaction) according to his/her tastes and relative prices. This model assumes that consumers derive satisfaction from consumption (probably not the case with expenditure on insurances, dental treatment, etc.) and seek to maximize satisfaction within the limits of income. The model also assumes that consumers have complete information with respect to supply, demand, and prices; complete mobility, i.e., can reach any market offer at any time; and that there is pure competition. In practice, consumers typically are not aware of and cannot judge all product offerings and may have restricted access. Consequently, consumers may well be “satisficing” rather than “maximizing” their utility. Economic theory does have a role to play in understanding consumer behavior, in so far as people may be “problem solvers, ” trying to make rational and efficient spending decisions. However, it is also necessary to consider and understand

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