Behavioural Economics Approach on Consumer Brand Choice—An Individual Analysis

Abstract

This research intends to explain more on brand choice particularly related to the consumer s sensitivity towards price changes. Theories and principles of behavioural economics specifically the matching law, are utilised in this study, as they explain more about brand choice. It examines and elucidates why consumers choose a certain product/brand and what influences them to do so. Price, an obvious source of explanation in behavioural economics has not been systematically related to brand choice other than in the context of promotional campaigns which are short-lived tactical exceptions to marketing strategies (Ehrenberg et al., 1994). Price differentials among rival brands are usually assumed to be too small to influence the patterns of brand choice. A sample of 200 respondents are obtained from the panel data; A.C Nielson Company where each of them bought the four products; baked beans, fruit juice, yellow fat and biscuits within 52 weeks. The analysis of the data in this research is done individually and quantitatively In order to elucidate in detail the decision mechanisms engaged by consumers in making choices, the theories and methodologies used by behavioural economists are where three analyses are conducted which are matching, maximisation and relative demand analyses. The results show that, at individual level, (a) consumers’ purchasing patterns show matching, (b) consumers maximize returns where each individual are proven to be having different influences throughout their everyday consumption.