Aim of Consumer Behavior Analysis

The main aim of analyzing consumer behavior is to maximize the utility behavior of consumers.

It is a well-known fact that consumers are always focused toward utility maximization, which leads to rise in the demand of a good.

If the utility derived by a consumer from a particular good is high, then there would be an increase in the demand for that good and vice versa.

Therefore, it is necessary to determine the factors that influence the utility behavior of consumers. The consumer behavior analysis is aimed at studying the factors, such as tastes, preferences, and different moods of consumers, which affect their utility behavior.

Apart from this, the analysis of consumer behavior seeks to answer the following questions:

a. How does a consumer decide the optimum quantity of a good to be consumed by him/her?

b. How the disposable income is allocated by the consumer for different goods, so that he/she maximizes the utility?

Based on two concepts, namely, cardinal utility concept and ordinal utility concept, there are two approaches that are followed for the analysis of consumer behavior.

These two approaches are as follows:

i. Cardinal Utility Approach:

Refers to an important approach of consumer behavior analysis. This approach is attributed to Alfred Marshall and his followers. This approach is also known neo-classical approach.

ii. Ordinal Utility Approach:

Refers to a consumer behavior analysis approach that was propounded by J. R. Hicks and R. G. D Allen. This approach is also known as indifference curve analysis.

These two approaches do not contradict each other, but are important for analyzing consumer behavior. Moreover, these approaches are useful for assessing consumer demand for a good for business decisions-making and theoretical purposes.