ECON 1 Lecture Notes - Lecture 19: Neoclassical Economics, Homo Economicus, Brand Management
Document Summary
A key assumption is that the brand is owned and managed by the company who controls the communication to a passive consumer. A key assumption is that if management gets the right marketing mix, then the brand will be successful and strong. The assumptions of this approach are based on neoclassical microeconomics on how market forces allocate resources most efficiently through the principle of the invisible hand: First, the consumer is and economic man who is able to make rational consumption choices by pursuing their self-interest and attempting to maximize their revenue and functional utility (highest functional utility relative to the price). The consumer is assumed to have perfect information about the available alternatives and the exchange between the two parties is perceived as an isolated event. In the exchange, the consumer tries to maximize the functional utility while minimizing transaction costs. They search for the best possible deal and considers every transaction cost before choosing the right product.
