The evolution of the core concepts which formed the foundation of the way the business is done and how the business organizations functioned is an area of interest for management enthusiasts.
The idea which germinated as the production concept has attained many peaks and is now evolving as the consumer side of the business.
The modern business world is, without any doubt, run by the availability and utility of data, in whose search the business firms spend a significant amount of money, time and effort.
Among the data classifications, the data on consumer behavior is considered the most valuable one, as it is the most critical reason behind the existence of the businesses.
Apparently, the businesses are in constant search of more relevant and usable consumer behavior data, which will make them efficient and effective enough in making needed adjustments to their offerings.
The piece intends to discuss some of the aspects related to modern consumer behavior, which interests the business firms and how they can exploit it to enhance their product and service offerings.
The following are some of the most important and essential aspects of the domain, whose presence is encouraged by the businesses.
The satiation level
Borrowing some expressions from psychology, humans always have a tendency to shop more and more, despite the actual need for it arising.
Although the thought of keeping the money as savings strikes, researches show that it’ll be only a decent amount while a significant amount will be spent on necessary and luxury shopping.
A rational customer in terms of economics is described as one who aims for maximum utility, no matter what.
Such a consumer considers utility or the benefits which are derived from the product or service, in contrast to the price paid for it as the supreme concern.
The buying decision is only made when the perception of the consumer approves that the utility derived from the product or service either equals or overtakes the price paid for it.
The concept of Marginal utility
The concept of marginal utility is one of the most recurring terms in economics and all the topics associated with consumer behavior.
Marginal utility is the change in the perceived utility level when the consumer consumes an additional unit or time of the product or service.
It is also a proven fact that the consumers will lose the utility when more units or times is consumed, and it calls for an upgrade or enhancement in the offering.
The influence of income
The income of the individuals plays a significant role in determining their purchase power.
A steady source of income can completely alter the living standards of individuals and households, which is totally described by the products and services they regularly use.
Therefore, the fluctuations in the income levels could be fatal for the buying decisions made by the rational consumer.
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The role of intertemporal choice
Another amusing term borrowed from the texts of economics, which gives a clear idea about how the spending behavior of customers now will affect their spending behavior in future.
Simply put, an individual who gradually builds up savings by spending less will ultimately spend the savings for a bigger purchase or event.
At the same time, an individual who saves less is not anticipated to make a huge purchase or at least not so frequently.
The concept of budget and related constraints
A budget is simply a proper financial plan for the year or so, presented in a neat and detailed way.
Personal budgets aim to keep the expenses of an individual under control and make sure there are enough savings made.
Every rational consumer has their own budget, which prioritizes the anticipated expenses and purchases, which can be adjusted accordingly.
Last but not least, the concept of demand has varying descriptions in business language.
The ability of the business in creating demand or maintaining demand in the market for their goods and services, after properly analyzing and executing the plans, born out of consumer behavior study are the ones which leave a long-lasting impression.