Econ: Consumption I

All of us consume. Everyday we buy many things like food, school supplies, clothes, books, or medicine. We avail ourselves of non-material things like cellphone load, education, haircut or recreation. Since birth, especially in a capitalist economy, all of us are consumers – consumption is necessary if a new and productive person is to be reproduced.

Too bad that despite of the importance of consumption to our lives, most of us are poor judges of what we buy. Some people, especially those with much money, are even sick of a psychological condition named compulsive shopping, characterized by the inability to control buy things, which are often unnecessary.

WHAT IS CONSUMPTION?

Consumption is the process of buying goods and services for the satisfaction of one’s needs and wants. A person who consumes is a consumer.

WHAT ARE THE PROBLEMS OF A CONSUMER?

The biggest problem of any consumer is the allocation of her/his limited money to a bewildering number of things to buy. How can a person get the best out of his money? Remember, economics is not just the study of work or the allocation of scarce resources… it is first, and foremost, the practical study of how one can get the most with the least.

Confusion due to a variety of goods

The multiplicity of articles in the market makes it difficult for a consumer to choose an article which suits her/his particular need or want. There are practically endless lists of flavors of ice cream, kinds of edible fishes, brands of laundry soaps, etc. Now, not all of the items offered have the same price nor can they give the same satisfaction. As a consumer you want the least expensive yet most effective or most satisfying product.

Lack of standardization

Even though many products are now mass-produced by machines and undergo quality tests, there is still a lack of standardization among the consumer items in the market. A particular brand’s shade of red is not necessarily the same as another’s. A manufacturer offers its shampoo in sachets in grams, another one offers bottles in ounces. There are square biscuits, round biscuits, star-shaped biscuits, and biscuits in all imaginable shapes. Lucky are those who are able to buy the thing they actually wanted or needed; most of us just buy the available article closest to what we have in mind.

Purchases bring different kinds of satisfaction

A peso spent on a pizza is not the same as a peso spent on pan de sal. Some people will be happier with just one slice of pizza while others would rather gorge on heaps of pan de sal. Some people will go on hunger strike to save money for a book, a new dress, or cellphone load, while others never save because they are slave to their stomach’s desires. The happiness or contentment one gets from a haircut is not as permanent as the happiness from a beautiful book or painting. Since not all of us have all the money to buy the things that will make us happy, we need to be smart enough to buy the things that will give us the most satisfaction for our money.

WHAT FACTORS AFFECT A CONSUMER’S BEHAVIOR WHEN MAKING A PURCHASE?

There are several factors consumers have to face every time they shop. These are the following:

1. Price – We, as buyers, like everyone else in a rational world, want the most satisfaction for the least cost. We scan the shelves for the cheapest product, watch the news to monitor price levels, haggle with sellers, shop during sales, or shop in bargain stores (like ukay-ukays.)
2. Quality and appearance of goods – Consumers must not only check the quantity of the product they are buying, they must also assess its quality. Many goods are cheap because their qualities are compromised. Of course, for a person on a tight budget, it is a risk that must be taken. But for those with the money, and thus the choice, to risk their satisfaction, health or future for a bargain is unnecessary and foolish.
3. Brands – We are influenced by the brand of the good we intend to buy. In a world of asymmetric information, brands are assurances. We prefer a particular brand because of its quality, popularity or attractiveness.
4. Advertisement – An advertisement is the offering of a product in the mass media. Advertisements aim to attract the consumer’s attention and sway them into buying the product. Advertisers use a number of ways to persuade people into buying the product. Other attractors that fall under the same category as advertisements include jingles, bonuses, or raffles.
5. Buying capacity – The choice of goods depends partly on the buyer’s buying capacity or purchasing power. People with little purchasing power are effectively barred from availing high-end products, while people with greater purchasing power have more freedom with regards to their choices.

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