With research regarding the psychological factors that influence the consumer decisions, that businesses intend to communicate with their market in the most effective manner. At the same time, the study of consumer behavior exposes the limitation of the process and helps businesses understand that consumers can only process limited information effectively. These studies help to enhance effective communication with consumers. However, at times businesses use them for manipulation of the consumer itself.
Theory of consumer choice stresses on the importance of maximizing consumer satisfaction. Each consumer has a limited budget, and has to use the available resources in the best possible way. Since, choices are numerous the decision allocation of budget between different products involves a trade-off (Solomon, Bamossy, Askegard & Hogg, pp.13-19, 2009). A consumer optimizes his utility at a point where the budget constraint line of the consumer is tangent to his indifference curve. An indifference curve on the other hand is any combination of goods that will give the consumer an equal level of satisfaction making an individual indifferent about any combination on an indifference curve.
Economic theory regarding consumer choice predicts that the utility of an individual increases at a decreasing rate. This marginal decrease in utility enhancement of an individual implies that there must be a point where the costs of additional consumer choice will exceed the benefits of the incentives provided by the additional choice. A limitation faced by the consumer choice theory is that the model only predicts indifferent between two particular goods and it is not so useful in helping us find out an optimal balance when numerous good and choices are involved. However, the theory makes us understand that a rational consumer always aims to maximize