For every dollar spent a decision has been made to spend it. On one level many decisions are more or less automatic. such as the decision to buy food . But the question of what kind of food to buy , how much and where to buy it involves a whole host of other decisions.
We face more consumer decisions today- and more complexity in decision making- than our parents or garandparents did in the past. We can recap the greatest rewards from the dollars we have to spend by making rational consumer decisions.
Rational Consumer Decision Making
It requires allocating time and money and other resources in the way that will bring us the greatest satisfaction,
Imagine that you have decided to replace your old television with a new large-screen model that will allow you to watch DVDs just as if you were in a movie theatre. To accomplish this, you will want to gather and evaluate information about available large-screen television and their prices. But information can be costly to obtain it. You will have to spend your time and possibly a portion of your income to find an optimum (as opposed to infinite ) amount of information about the alternatives, the optimum amount of information is just the ideal amount- neither too much nor to little.
Factors that needs to consider to make decisions
- Consumer needs to consider their transaction costs when allocating their scarce money and time
- Asking if you really need a large TV
- Doing cost benefit analysis. Which choices are made that yield the highest net benefit within the constraints of limited time and income,
- Values and rational decision making. To make choices that provide us with the greatest satisfaction, we need to understand our personal values and consider them as we make decisions.