Consumer behaviour is the study of individuals, groups, or organizations and the processes they use to select, secure, and

dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.
.

 It blends elements from psychology, sociology and social

anthropology and economics . It attempts to understand the decision-making processes of buyers, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioural variables in an attempt to understand people's wants.

It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general.

UTILITY
utility = level of happiness or satisfaction associated with alternative choices utility maximization. total utility - the level of happiness derived from consuming the good. marginal utility - the additional utility that is received when an additional unit of a good is consumed.

MARGINAL UTILITY No. of slices of pizza

0 1 2 3 4 5

total utility marginal utility

0 70 110 130 140 145

70 40 20 10 5 -5

140

LAW OF DIMINISHING MU
law of diminishing marginal utility - marginal utility declines as more of a particular good is consumed in a given time period, ceteris paribus

even though marginal utility declines, total utility still increases as long as marginal utility is positive. Total utility will decline only if marginal utility is negative.

CONSUMER SURPLUS

Individuals buy an item only if they receive a net gain from the purchase (i.e., total benefit exceeds opportunity cost.

This net gain is called consumer surplus.

CONSUMER SURPLUS