Products exist to satisfy demand. The latter is born when there is a need to purchase a product of a certain quality. In other words, to obtain a useful product. This criterion is subjective and varies depending on the circumstances.
Thus, rational consumer behavior consists of optimizing expenses by purchasing useful goods. This also helps to reduce costs from non-targeted purchases.
The usefulness of a product is expressed in its ability to satisfy the needs of the buyer.
Thus, the same product in amazon database the eyes of buyers with different social statuses, incomes and circumstances can look attractive and not attractive at the same time. And this is despite the fact that its characteristics are unchanged.
In economics, consumer behavior is closely related to the "Income Effect" and the "Substitution Effect".
The buyer's actions are analyzed according to the criteria of utility. As in the case of income types, it also comes in two types. So:
Total utility is the one that can be obtained from the entire set of goods even as new goods are purchased. At the same time, it differs depending on the needs of a specific individual. For example, one is going to fly to cold countries, so a fur jacket will interest him, while a person heading for a vacation to a tropical climate will pass by, rather paying attention to a beach set.
Marginal utility is the amount of utility that can be obtained from each individual unit of the good purchased. For example, a glass of water is of maximum benefit to a person who is very thirsty. However, subsequent portions are less relevant, and therefore less useful. A person is unlikely to pay as much for the third, fourth, fifth glass as for the first.
The role of utility in rational consumer behavior
At the same time, it is marginal utility that influences demand formation. It determines how many people can potentially buy a product. Hence the promotions, discounts for buying two or three pairs of shoes, and so on.
The theory of marginal utility emerged in the 19th century as a response to the labor theory of value. The essence of the latter is that the price of a product is calculated based on labor costs. Supporters of another theory believe that it is more important for a buyer to know how much an object or service is needed. The higher their value for an individual, the more he is willing to pay.
Thus, adherents of the theory of marginal utility try to answer the eternal question of economics about how to satisfy the needs of everyone using available resources, the overwhelming majority of which are limited and finite. This concept is used by scientists when analyzing the market situation.
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