Organisation Wants to Make Consumer More Rational

Organisation wants to make consumer more rational. It helps them.

Theories have long lastingly stated that the consumer tend to behave rationally while making a purchase decision. Rational Choice Theory states that consumers take prudent and logical decision which are more or less working in their satisfaction level. They also avail the products that give them the maximum benefit and highest satisfaction. We also behave predictably and in a more routine behaviour.

But Behavioural Economics states that consumer tends to behave irrationally while making a purchase decision. Companies and industries have long exploited this psychological theory and have always used it to their advantage. With the advent of internet in 1983, consumers have seen the consumer market take leaps and bounds in 3 decades. They are being bombarded with a plethora of products and they are always confused with the choices. Taking advantage of this situation, companies influence consumer behaviour by making them take irrational decisions of product purchase.

RATIONAL BEHAVIOUR:[pic 1]

Rational decisions are taken on the basis of certain attributes that influence people’s attitude of buying a product. They are:        

1. Income Constraint: When people are bound by the variable of money, they tend to make more calculative decisions by evaluating the pros and cons of it. They also take into account the emotional and the psychological benefit that they would receive when they make the purchase. This is also taken into account considering long-term and short-term benefits.
2. Time Abundance: When consumers have the luxury of time, they make more rational decisions. They again take into account the characteristics of the product that would best suit their interest in the purchase. They also evaluate many alternatives before arriving at the right product.
3. Health and Safety Concerns: This is the area where the consumers tend to make the maximum rational decision. We see that mothers take this decision for their babies. They do not compromise on the price but they always make the best choices while purchasing stuff. They choose the best company for purchasing their product. This shows their rational decision-making behaviour.

Also, the safety issues come into play for consumers to make informed and rational decision. The Havells ad showing the child’s care for her mother’s hand also elucidate the safety issues that the product entails. The product states that consumers keep their family members safe from the danger of fire. Safety is also responsible for the product purchase decision being more rational and thoughtful.

There are many advantages of behaving rationally. Some of these advantages are:

Advantage:

1. Chances of making error are very less.
2. Lot of information being used to take a calculative decision.
3. No assumptions made while choosing a product.
4. Lack of distortions in making a decision.
5. Evaluation model already established as the final outcome of the product benefit already in the mind  
6. Step-by-step approach to take the decision leading to the informed purchase.

Disadvantage:

1. Decision making is more complex and sometimes also confusing for the decision maker.
2. Information is also sometimes insufficient.
3. Also, the decision making takes time which takes a lot of effort.
4. Some over-thought on some issues leads to incorrect decision making even after making rational choices.

IRRATIONAL BEHAVIOUR:

Irrational decisions are made with no thoughts in mind i.e. they are taken either on the basis of gut feeling which results in people buying products that are actually not required by them. They are also subjected to the marketing campaigns that are subjected to promote their inner mind to take decision irrationally.

Some of the most common attributes of irrational decision making are:[pic 2]