CONSUMER PREFERENCE

Generally, consumers prefer a certain number of commodities. Some of the goods are normal goods and can be substituted by others. The price of such commodities has an impact on demand. At the same time, the substitution of some normal goods is not possible. Such commodities are bought at fixed intervals and they are a part of the basic consumer basket such as food, water, gas, and power.

The consumer buys normal goods at a regular price, and as a proportion of their income.But the prices of goods can change so consumer’s income. The supply of commodities can also be affected by a number of factors. The consumer decides what to purchase and what not to purchase. A consumers’ preference changes when the consumer decides to maximize utility at a lower price level.

Preference relations

Any consumer preference has two important relations. The strict and weak preference relation decides the overall preference.

The strict preference is defined as

x>y→x≥y but y≥x

This means x is preferred to y. Note, here y is  considered equal to x. The consumer can either prefer x or y.

Completeness

Any commodity is always preferred to its close substitute.sThey are very different from each other in terms of characteristics.For e.g. Colgate toothpaste may be preferred to such substitutes such as close up, Pepsodent or sensodyne. The qualities of each toothpaste may differ in size, colour, shape, and price. But the real choice depends on the income and the taste of the same consumer.

Transitivity

Sometimes more commodities are available as substitutes.Transitivity is slightly different from completeness. It implies that it is impossible to face the decision maker with a sequence of pairwise choices in which preferences appear to be cyclical. For eg. An apple is as good as an orange and an orange is as good as a mango. But then an apple is preferred to a mango. Transitivity explains that consuming any goods will give equal satisfaction to a consumer.

Reflexivity

Reflexivity means any commodity is as good as any other commodity. There is no difference in consumer satisfaction when any commodity is consumed. For eg x>y≥z, then x>z. the preferences do not change. The consumer prefers a bundle and any bundle is preferred or is indifferent to it. In everyday consumption basket, a consumer often purchases different close substitutes of commodities based on taste, color, shape, size and on their income.

Nonsatiation

Nonsatiation adds more characteristics of a good because it is preferred by a consumer. Each consumer expects something different from the earlier purchased commodity. The consumer always search for something extra above what they usually buy from the market. It's here where the marketing strategies help in breaking the brand loyalty and help the companies make their way into the hearts of the consumers.

Continuation

Consumers always try to switch to different commodities or close substitutes. They get more satisfaction from consuming different commodities at lower prices.But other factors may make them worse off, such as changes in price, size etc. So, they prefer to continue with their earlier choices.