Individuals and scarcity: Consumer decision factors

As elementary-school students explore how their individual consumer decisions affect the market economic system, it is important that they understand the relationship between competition and prices.

For all consumers, even elementary students, decisions about buying products depend on several factors. Some of these factors relate to scarcity and are outside the everyday consumer's control, such as fuel prices or availability of raw materials. Some of these factors may be unconscious, whether the product is a high-ticket item or an everyday consumable.

Unemployment rates and the state of the economy factor into scarcity and affect consumer confidence, and nearly all purchases depend on the amount of discretionary monthly income an individual has to spend, whether this is what an adult has left to spend after fixed monthly expenses or the amount of fifth-grader's weekly allowance.

Buying a product usually has five stages: need recognition/problem awareness, a search for information, an evaluation of alternatives, purchasing the item, and post-purchase evaluation. If a purchase is "low-involvement," such as buying a soft drink, evaluation is simple or nonexistent, but if a purchase is "high-involvement" (buying a car or a house), evaluation can and should be much more thorough. The information at the following link shows just how complex consumer decisions can become:

http://www.consumerpsychologist.com/cb_Decision_Making.html

In order to increase their purchasing power, consumers should remember their primary goals when buying. For instance, keeping in mind that a car is used for transportation, being swayed by color may nudge the purchaser in the wrong direction. While striving to get the best quality or the greatest amount at the lowest cost, consumers should recall that sometimes the highest quality isn't what's needed (the principle of "starter" equipment) or that buying in bulk may require more storage space than is available.

In the battle against scarcity, the internet and social media have empowered consumers to learn more about goods and services and the buying experience than ever before. Today, the first step in the buying process is usually done with a computer, tablet, or mobile phone as consumers research everything from laundry soap to complex financial products by searching on Google and checking out brand web sites and companies' Facebook and Twitter accounts. These technologies also spread word-of-mouth information with sites like TripAdvisor and restaurant review sites like Yelp.