Consumer Behavior Consider decision making

Rational consumer behavior: What can organizations learn?

The consumer decision-making process can be conceptualized as a rational, economic model or a subjective, psychological model. The first stage involves the recognition of a need, followed by a search for information, evaluation of alternatives, the purchase, and is concluded by the post-purchase evaluation (Buyer behavior, 2012, tutor2u). This process can be long and laborious or relatively short in duration, depending on the nature of the good or service. For example, a consumer buying a hamburger recognizes a need of hunger; compares the selections on the menu at McDonald's; compares the prices, nutrition and taste of various types of burgers; makes the purchase, and then decides whether he likes the burger and would buy another. A consumer buying a refrigerator notes that his refrigerator is broken, surfs the net for product reviews and looks locally for deals; makes the purchase, and then decides if the purchase was worthy over a much longer period of time.

Depending upon the type of item, the consumer hardly realizes it is a process at all. In very routine purchases, the consumer may skip parts of the process, such as when he or she grabs his or her usual brand off the supermarket shelf, rather than researching the price or quality. There are, in general, two categories of purchases when consumers make decisions, that of "high-involvement purchases" which "include those involving high expenditure or personal risk -- for example buying a house, a car or making investments" versus "low involvement purchases (e.g. buying a soft drink, choosing...

According to the classical economics theory of supply and demand, when prices increase, demand goes down and when prices decrease, demand increases. In the case of products with fairly elastic demand consumers are able to substitute goods for items whose prices have increased, such as apples for oranges. "A rational consumer takes the best action within the world of the model" (Shugan 2006: 2) Depending on the nature of the goods and services, consumers can 'stock up' when an item is discounted, or find alternatives when prices go up. "The equation of human rational behavior with instrumentalist, especially economic, rationality represents the hallmark of the economic or rational choice approach. The latter imports, makes explicit and extends orthodox economics' implicit conception of rational behavior as economic rationality" (Zafirovski 2003).
Rationality in economic terms is not always the same as how we might define rational in scientific terms. For example, it is not necessarily 'rational' to want to buy a particular pair of shoes because they have been manufactured by a well-known designer. However, according to models of rational consumer behavior, assuming that there is demand for Nike sneakers, demand will increase at the Sports Authority (a mid-market retailer) when prices decrease and decrease when the sale concludes. Some irrationality is built into classical economic models. For…