Consumer preference is defined as the subjective tastes of individual consumers, measured by their satisfaction with those items after they’ve purchased them.Consumer preferences can be measured by their satisfaction with a specific item, compared to the opportunity cost of that item since whenever you buy one item, you forfeit the opportunity to buy a competing item.Consumer satisfaction which they derive from the fulfillment of their preferences can be determined by two approaches which are ordinal approach that is the utility derived is measured by giving ranks for example we prefer a BMW car to a Nissan car, but we don’t say by how much.The other method is cardinal utility approach in which utility is measured numerically such that when say that we prefer chocolates twice more than biscuits.
Lets consider an example you are an avid video game fan and so you go to a shop to buy your video game console,suppose the shopkeeper shows you two consoles one is “playstation” and the other one is “xbox”.Both of these consoles are somewhat congruent and provide somewhat the same gaming experience with minor technical and structural differences.Then what difference will it make right?why? The two video games are almost same then why not flip a coin and choose one? But if see it clearly it creates a difference not to all but to many individuals.This is due to the reason that people get more amount of satisfaction from one product than they can get it from the other product.The satisfaction is termed as utility in economics and it is an important tool in the feild of microeconomic study.As the preference for one product over another increase, one product may outsell the other even if the price is much higher.The preferences of a consumer are dependent on a variety of factors such as habits,tastes,culture,education,peer influence and a pleothera of other factors.
Factors Influencing Consumer Preference’s
Our preferences are independent for example,Raghav goes to a shop to buy a watch and that shop has all kinds of watches from inexpensive ones to expensive ones,from metal strap to leather strap,from analog to digital.He stumbles upon a beautiful analog watch and he is love with it but it is very expensive and thus he is not able to afford it.Thus he has to buy another watch which fills into his budget in the process leaving the product which gives him maximum satisfaction.This makes us ponder about consumer preferences and helps us realize that consumer preferences are independent but there are certain limitations to it which play a major influence on what the customer would actually purchase in the end.The factors which influence consumer decions are somewhat additional to the factors which influence consumer preference.
Such that it depends upon the income of the consumer as a consumer cannot buy a product if he can’t remotely afford it.It also depends upon price of the product for example if you like a product but the seller is demanding an insanely high price then you would avoid it.It also depends on if you have the given means to substitute the product with a cheaper good.Sometimes it also depends upon the availability of the product for exmple it has happened to us so many times that we go to bakery to buy a cheescake but it is sold out due to which we have to settle for a chocolate cake.Due to which consumer factor is not affected by one but by many factors.
Importance Of Consumer Preference
Preferences are the pivotal factors which influence consumer demand.The underlying foundation of demand, therefore, is a model of how consumers behave.Consumer preference determines what products people will buy within their budget, understanding consumer preference will give you an indication of consumer demand. .Consumer preference depends upon price of the product,income of the individual and the availibility of its substitutes and also the taste of the consumer.Our preferenes although may seem ineffectual for us but it has a huge impact on business,our economy and the world we live in due to which consumer preference is vital to understand.This information will help to ensure that you have enough product to meet demand and will help you determine the price for your product.Due to consumer preferences we can identify and analyse the the consumer behaviour which would influence major business and economic decisions.
Conclusion
In conclusion,consumer preference plays a paramount role in every economic transaction that takes place on this earth.It is foremost and salient to analyse this field as through consumer preference’s we will be able to undertsand the needs and wants of the consumers which will help in managing the demand of those goods.Thus consumer preference although might seem insignificant through the naked eye plays a significant role in making economics a superior field of study.
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