f data can be collected by the simple process of observing the way that consumers act in the marketplace - the items they purchase, the reasons for such purchases, and the variables or influences that help to shape purchase decisions (Keller, 1, pp. 104 -105). A question of enormous significance to economists and to manufacturers is why people make the purchase decisions that they do. Related to this question is the issue of how markets as well as branded and generic products themselves are changed, shaped, and developed by the consumer decision making process.
All theories of consumer behavior begin with the assumption that consumers are making rational choices about how they will allocate their resources (Morrin, p. 518). It is further assumed that the goal of all consumer spending is the maximization of personal satisfaction. Economists speak of this goal as the desire to purchase the largest possible amount of consumer utility. Utility, used in this manner, refers to the ability to satisfy a particular want; it does not describe the actual usefulness of any particular good or product.
The theory of marginal utility suggests that consumer demand for a commodity is not based upon its "total" utility, because the choice facing the consumer is not whether to buy all of a commodity or none of it. When deciding to buy an additional unit of a good, consumers become willing to pay only the value of the marginal utility of the last unit they are getting. As more and more goods of a single type are acquired, the "law of diminishing marginal utility" comes into play and consumers become less willing to pay high or equal prices for more units of a particular good (Keller, 2, p. 147).
Consumers want to maximize their total utility by the careful allocation of incomes, acquiring needed items and luxury items as funds become available. For example, a young married couple may divide available funds among six different furniture item...