Factors Influencing Individual Consumer Choice

• Income

  When individuals earn higher incomes, an increase in consumption occurs.

  • APC and MPC decrease with increased income - more income directed to savings
  • Higher incomes increase the propensity for saving and accumulation of wealth through the purchases of shares, bonds and real estate, etc.
• Price


  People will buy necessities regardless of price changes, but consumers will reduce their demand for other goods. As price increases consumers will make purchase decisions based on the relative price of goods and services in the same categories
• Prices of Substitutes

  The amount of a good demanded at any time will be affected by the prices of other goods. If the price of a good/service rises, consumer demand for a good will also increase.
• Prices of Complements

  If the price of a good increases, a decline in consumer demand for the good and its complement is expected.
• Preferences


  An individual will decide to purchase goods or services which provide the highest level of utility or personal satisfaction. Consumer preferences and tastes can be influenced by:

  • Fashion
  • Advertising
  • Education
  • Social or peer pressure
• Advertising


  Designed to influence consumer preferences and tastes by informing or persuading consumers to buy more of or switch from a competitors good or services to their own
• Informative Advertising


  Conveys information to consumers about price, quality and quantity
• Persuasive Advertising


  Attempts to build brand loyalty by linking consumption of the good or service with a certain social image or attribute of the product or service