Behavioral Economics And Its Effect On Consumer Decision Making

These research topics on consumers buying decision making is one of the most interesting topics by different researcher and marketer before, and even still there are research going on it. Different researcher has shown different cause which related to consumers buying decision making that 's why

In today’s culture, consumers are very much in charge of their decisions in regards to purchasing. Advancements in technology have not only allowed consumers the capability to research, price shop and purchase products, but have also given businesses the ability to reach a targeted market based on data collection and past purchase history. Given that consumers have the purchase power in today’s society, many businesses have implemented situational factors to influence a consumers buying behavior.

Behavioural economics is the study of the effects that psychology has on the decision making of the economy. This tends to be the way that people think and feel when they are spending money on a certain good or service. The great economist Adam Smith was the first follower of this idea through his book “The theory of moral sentiments” which dates back to 1759. However, it took over 100 years to get a more clarified meaning of how big of a role the psychology of a buyer plays in economics. In behavioural economics there are seven basic principles which all contribute to the decision making process. Behavioural economics can explain how people will react to different situations such as times when there are no economic problems and times when

Rational consumers know what he or she wants and makes the most out of an available opportunity. Are consumers really rational or can they sometimes be irrational? Economist must analyze the decisions of the rational consumer by exploring the concept of utility, opportunity cost, and the demand in order to determine or explain how or why a consumer is either rational or irrational. This should be more understood and looked into because a clear understanding of consumer behavior will help to accurately predict consumer response to marketing innovations.

The most fascinating chapter for me was Chapter 8, Behavioral Economics, more specifically the two-part process of our brains, System 1 and System 2, the most common biases, and the two systems interaction with each other. I’ve always been fascinated by human behavior and thought; why we do the things we do, what causes our actions, and why we constantly indulge in self-destructing habits and tendencies even though we have a clear understanding of the adverse effects of those choices. Learning about the motives and reasons why we undertake these actions are very important to me for many reasons. Mostly to reverse already previously ingrained bad habits from my child development, to have the knowledge and skills to prevent myself from

Dan Ariely is set out to disprove the common assumption in conventional economics that a consumer behaves rationally when he/she makes economic decisions, in his book, Predictably Irrational. With the help of thought-provoking, lucid and fun experiments, he discovers the irrational side of consumer behaviour. According to Ariely, we generally think that most of the decisions we make are well reasoned and smart but this is unfortunately not the case. We constantly overpay, procrastinate, underrate, overvalue, and fall for marketing tactics that we think we are too smart to be deceived by. But our irrational behavior is so consistent that it is predictable. The book deals with behavioral economics, a new field that applies insights of psychology

Consumers’ decision to purchase a product in the market is contributed by a variety of reasons. Some customers purchase a commodity because it is satisfying their taste expectations and its price is friendly to their pockets. Other customers decide to buy a product because to is prestigious but not because of needs or satisfaction (Screpanti, and Zamagni, 2005). Marshall Keynes and Thorsten Veblen who are proponents of theories on behavioral economics had views on why consumers purchase certain products in the market. Marshall and Veblen had a psychological similarity in their idea as well as differences in their point of

Consumers always make their purchasing decisions based on their motives. When discussing this question, it can be divided into different sections. Such as what is consumer behavior and purchasing decision, what is motivation and motivation process, what are rational motives and emotional motives, how rational motives and emotional motives involves when making a purchase

Understanding consumer buying behavior entails marketing, relationships, and consumer behavior. Consumer behavior comprises all the consumer decisions and activities connected with the choosing, buying, using and disposing of goods and services. Marketers must pay very close attention to consumer behavior that occurs before the purchase and after the particular product has been used. Studying consumer habits is one of the steps in marketing search and analysis. In addition to other basic principles of consumer buying habits, marketers also need to study the decision and actions of real people. Until recent history the study of consumer behavior was focused on generalized consumer decisions. With

It’s interesting the one thing that spurs my whole consumption process is when I have told myself that I really want something, I need something, or I have to have something. This self-awareness is what even allows the consumer to know what specifically they want to purchase. If we don’t have this identifying behavior then product selection ends up being a moot point. My purchases are filled with items that were to serve a specific need or want. I usually identified this need and began the evaluative process. This process can be easily influenced through a multitude of different situational characteristics that are both intended and unintended. There are characteristics that the store or organization will try to put out and the portion that comes from product and consumer habits. I think for me as I look at the products I buy and the places I go

According to our text, consumer behavior is defined as “the study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society”. This means that companies are using this knowledge to influence consumer’s decisions not only about which product to purchase but also about which college to attend, which charities to support, how much recycling to do, whether to seek help for an addiction and much more. Since the beginning of this course I have been able to see that what I buy is not just a random occurrence, everything I purchase from gasoline for my car to the makeup I wear can be tracked using consumer behavior.

In recent years behavioral economics appeared as a new subfield of economics. A sharp departure from traditional economics, it is surrounding by some questions. Historical roots of behavioral economics could be found in eighteenth century. Adam Smith in his paper "The theory of moral sentiments", had noted that human behavior was not ideal, there were deviations from rationality and so these deviations could have impact on economic decisions of individuals. In that time, Smith had no idea about the exact theory of decision-making, however his paper played substantial role in development of behavioral economics. Smith's idea was almost discarded until Great Depression, when economists such as Irving Fisher and Vilfredo Pareto returned to the concept of human factor to explain the stock market crash by considering these individuals deviations from the rationality. In 1955 economist Herbert Simon introduced the term "bounded rationality". Under this term Simon meant rational

Consumer behavior refers to the behavior of consumers when they buy and consume economic goods and services. The behavior during the purchase of goods consists of, the purchase planning, purchase negotiations, the purchase completion, which still has contractual nature, to post purchase behavior is highly variable (Schiffmann & Wisenblit, 2015, p. 30-32). The consumer is influenced by the different factors such as: culture, family, peer groups, feelings, attitudes, personality and many other components. Therefore the consumer behavior deals with how the consumer buys, how the consumer decides to buy the product, where the consumer buys the product, how the consumer pays for the product and what the consumer uses the product for (Blackwell et al., 2006, p. 4-6).

Engel (1986) define consumer behavior as "those acts of individuals directly involved in obtaining, using and disposing of economic goods and services, including the decision processes that precede and determine these acts". The present paper is a reflective journal based in which three different marketing activities have been selected and analyzed from the perspective of their influence on consumer behavior.

The specific area of interest I focused on for this assignment is Behavioural Economics. Behavioural Economics (BE) is a scientific discipline that involves the study of a variety of effects on the economic decisions made both by institutions and individuals (Lunn, 2014). This is a dynamic and exciting field and sub-discipline within the field of economics that has gained much popularity in recent years. Behavioural economists have the opportunity to make important contributions in a variety of fields, including marketing and advertising, policy making, and in many other industries. In this essay, I discuss the field of Behavioural Economics and explore current trends and important knowledge helpful for anyone interested in a future career in this area. It is argued that Behavioural Economics is far more than a passing trend and will only grow in importance, particularly in public policy making; at the same time, researchers in the field need to start addressing some of the theoretical and conceptual problems in the field if BE is to truly realize its potential.