Consumer choice

Consumer choice theory

A hypothesis about why people by things

Assumptions of consumer choice theory

Utility maximisation- a calculated choice to buy something

Non-satiation- never completely satisfied, so keep consuming

Decreasing marginal utility- happiness from consuming at a discount

Trade offs

Buying goods → less income for other goods

Working more hours → more money but less time to spend it

Using savings → allows for more current consumption but reduces further income

Budget constraint

The limit on consumption bundles that a consumer can afford

Indifference curve

Shows consumption bundles that give the consumer the same level of satisfaction

Driver

A factor affecting change in demand and supply

• these factors can drive trends

Key drivers

Income

Technology

Cultural and social factors

Consumer tastes and attitudes

Government policies

Key driver- income

Increase income → increase food quality consumption

Shows counties development- low quality food, low income

Key factors- technology

What can be grown and where

Marketing a product

Quality of product

Quality attributes

What consumers expect and demand

Key driver- cultural and social factors

Social norms

Household consumption

Cultural and ethnic tastes and traditions

Fashion/ fads

Key drivers- tastes and attitudes

Related to cultural and social factors

Can be influenced by health concerns and the media

Can be influenced by fashion/fads

Can be seasonal

Key drivers- government policies

What can be grown and where

Affects what cab be purchased

Influences what consumers expect and demand

• hygiene standards

• Food labelling sand origin

Marketing

Management process for identifying, anticipating and satisfying consumer requirement profitably