The Study of Economics Helps to Provide Insight Into the Decision-Making Processes of Both Consumers (Demand Side) and Producers (Supply Side). Economics Suggests That Both Consumers and Producers Make Rational and

Introduction

We live in challenging economic conditions, which can be characterised by change and volatility. However business decisions are still required to service the relevant markets and consumers. The consumer needs, values and behaviour shall continually develop – this shall have a direct correlation to the supply and demand within a given geography (microeconomics and macroeconomic).The resulting shift on consumption – food and its future supply. Climate change shall be a growing concern, whereas media and technology shall enable consumer awareness – information being available quicker – the greatest challenge is getting these forces to interact, thus responding consumer buying needs – the products and services (Yu Ma, Ailawad, Gauri, & Grewal, 2011).

What steps do rational consumers take in order to optimize their spending of discretionary income?

Past and present generations dictate spending behaviour (Epp and Price, 2008, p53) – “whose in and whose out”. The ability to understand the dynamics that influence consumer purchasing pattern are challenging hence the US sample used between 1982 and 2003 estimated results and categories are prioritised according consumption, life stage and income. The demand on consumption around the waistline shall grow, as live challenges increase so to would the consumer consumption patterns – as food prices increase so to would the consumer values around it spending on products and services.

Discretionary income shall alter according family size and income (Yu Ma, Ailawad, Gauri, & Grewal, 2011, p27) – a household would cater for the basic basket of goods. This basket of good would vary between the different income brackets (LSM groups). Company’s cater for different LSM groups, for example, major food retails like Woolworths (Woolies) focuses on the high end LSM groups (LSM groups 8-10), whereas the Shoprite Checkers for lower LSM groups. However both store offer the same product but the differentiating strategies...