Consumer Behavior Reflection Journal Report DC Essay Example

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Соnsumеr Bеhаviоr Rеflесtiоn Jоurnаl Rероrt DС


Any person that is involved in a consumption process is referred to as a consumer. Consumers can be identified by the nature and type of market in which they operate or belong. On the basis or types of consumers there are two types: final/individual consumers or industrial consumers. This report is concerned about final/individual consumers who meet the needs of their households or family needs or who buy for personal consumption. Consumer behavior referrers to the activities and actions of individual who take part in purchasing and using of economic services and goods. Consumer behavior involves both physical and mental actions- this means that consumer behavior is a totality of disposition of goods and services, acquisition and consumption.

It encompasses, when, why, where, how, whether and how long consumption depends. An understanding of the consumer behavior helps in the understanding of different market segments as it involves policies and strategies that can penetrate the market. In addition, it seeks to find the gaps in shaping their aspirations and desires solving many consumer’s day to day challenges and problems in purchase.

According to Engel (34) consumption is the sole purpose of all interest of a producer. Thus, the protection of the consumer is a key aspect when speaking when dealing with marketing. Being the last member in the long business chain the consumer needs protection from low quality products and services.

Economic theory

Economic theory of consumer behavior focuses on how consumers allot there income and also determines the demand of goods and services. According to the traditional theory of demand, it begins with the examination of the consumer behavior since the market demand is assumed to be a collection of individual consumers. In the traditional economic theory it is assumed that the consumer has full authority and knowledge of all available commodities, income as well as the prices of the items or services in the market. In order to attain the objectives then the consumer has to compare the satisfaction of various goods which he or she can buy with his/her income in easier manner (Engel 23).

The theory is divided into smaller theories so that it can be able to explain consumer behavior in detail. The sub theories of economic theory include: psychological law of consumption, marginal utility theory, and relative, absolute and permanent income hypothesis. Marginal utility theory was formulated and developed by classical economists. According to the economists the consumer has the obligation of continual purchase of services and products that would deliver him maximum satisfaction or most utility at affordable prices (Kotler 12). According to marginal theory human beings are rational in all the activities and the purchasing decisions that he/she makes are as a result of economic calculations made. The theory comes up with two laws that govern consumer buying behavior.

These two laws include law at equi-marginal utility and the law or diminishing utility. As per the law of diminishing utility the consumer satisfies his wants depending on the priority of the service or good and that he unconsciously or consciously evaluates the price that he/she will be paying for the service or commodity. The consumer arranges his expenditure in such a way that marginal needs from different demand are equalized by the process of substitution of the utility or product (Kumar 11).

The other sub theory is psychological law of consumption. Its fundamentals lie on income. The law states that when income increases, consumption also increases but not with an equal margin as that of the income. This depends upon three related prepositions; i. when the accumulated income increases, the expected expenditure also increases but on a minimal amount ii. An increment of income is divided into spending and saving, iii. An increase in the level of income is probably leading to either more spending or less saving as compared to previous expenditure. This sub-theory of economic theory highlights that idea that consumption depends on the income and that the income earners have the tendency of spending less on consumption as compared on income increment. However several researchers have criticized this theory stating that there are other non-income factors that influence that rate of consumption spending especially in the short run.

The other sub theory that is embedded in economic theory is absolute income hypothesis theory. The theory states that individual consumer is the one who determines the fraction of his current income that he/she will devote in consumption on the basis of absolute income level. One thing is that absolute income leads to the decrease in the fraction of income directed to consumption. Despite the fact that the sub theory explains more about fractional division of income it is criticized due to its inability to reconcile data. An individual consumer is obliged to set a fraction of his/her expenditure depending on his level of income. Relative income sub-theory of general economic theory (Gandhi 45). This implies that spending is related to family relative position in the income distribution of similar families. It states that the fraction of income spend on consumption is dependent on the level of income relative to the incomes of other closely related families and not the absolute level of family income. The theory stands out to support the idea of societal spending as a factor which increases or reduces purchasing power of an individual consumer. An individual consumer benefits from societal force of spending that includes social and cultural norms.

Personal reflection based on theory

Economic theory of consumer behavior focuses on how consumers allot there income and also determines the demand of goods and services. With reference to my personal life experience as a student the theory, the level of pocket income –in this case income- determines what I purchase in school. For example, during first weeks just after opening the school more students visit the market since their income is still intact as compared to the last days towards the closure of school (Chisnall 23). According to the traditional theory of demand, it begins with the examination of the consumer behavior since the market demand is assumed to be a collection of individual consumers. From personal experience as a student the above statement is true since all the business near the college is determined by the presence of the student who in this case are individual consumers of their services and products.

Reflection on personal consumer behavior

Upon evaluations of relevant theories and models of consumer behavior I consider that consumer purchasing power is not only determined by the level of income of other close related variable such as culture, religion etc, but it is determined by the nature of consumer attitude towards buying of the product or services. The demand of each commodity determines the level of consumer behavior (Engel 17).


Determining consumer behavior businesses have the chance of knowing the choices and preferences of their clients-consumers hence reduction of unnecessary cost during marketing. It is ideal for business students to inform themselves with this knowledge so as to compete effectively businesswise. Proper consumer decision making process is governed by other factors but emphasis should be placed towards personal consumer preference rather than communal or societal.

Works Cited

Philip Kotler: Marketing Management (Millennium edition), Prentice – Hall of India (P) Ltd., New Delhi – 2001.

Aakar, Day and Kumar, Essentials of Marketing Research, John Wiley & Sons 2001.

J.C. Gandhi. Marketing a Managerial Introduction, Tata McGraw Hill Publishing Co. pp.98-99 2008.

P.M. Chisnall. Marketing a behavioural analysis, Englan McGraw Hill, p.179, 2004

Engel L.F., Dt. Kollat and R.D. Black. Consumer Behaviours, New York, Holt, pp.117-135, (1998)