Why People Purchase The Things: How Consumers Make Economic Decisions

How Consumers Make Economic Decisions
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How Consumers Make Economic Decisions
Introduction
Several factors influence consumer decisions when it comes to the purchase of certain goods and services. A successful marketer should be able to identify the various reasons why people purchase the things they have at any given time. Understanding these factors helps the marketer to identify the most efficient way to convince the consumer to purchase the products on sale. In most cases, the financial situations of the consumers are the main determinant in their purchase patterns. If properly analyzed, one will realize that most consumers plan their budgets, according to the priorities they need to consider at any given point. The theory of consumer choice analyzes the spending patterns of consumers and the reason behind their decisions. The theory provides a comprehensive study of the processes involved to select, purchase, use and their experiences while using the products. The theory of consumer choice affects the demand curves, higher wages, higher interest rates and the role of information in economic transactions.
In any economy, the higher the prices, the lower the demand and vice versa. The demand is, therefore, affected by the income of the consumers. Most consumers have fixed salaries and the only time they get to purchase products without straining is when the prices of the goods are subsidized to fit their budget. The demand for products, therefore, affects the demand for products. In the case of Toyota, the demand curves change depending on the prices placed on different goods. The best way to increase the demand is to reduce the prices of products once in a while to attract consumers. Doing so, especially in set times during the year for instance black Friday deals keep consumers waiting for the reduction in prices. Close observation during this time will reveal an increase in the demand of goods.
Additionally, the theory of consumer choice affects the consumer’s decisions when they have higher wages (Mankiw & Taylor, 2006). In this case, the consumer’s increase in income can increase the consumption of one good and a decline in the consumption of other goods. These goods can be described as inferior goods as people reduce their consumption as the wages rise. The advantage of this on Toyota is that most people are likely to adopt a luxurious lifestyle with an increase in their wages, Toyota is a vehicle manufacture company is likely to attract more consumers with increase in wages as most people prefer buying cars for convenience purposes.
Higher interest rates placed on pro...