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Chapter SevenHow can economical environment factor predict consumers consumption?The dominant approach to industrial economics is the one which is usually described as the structure-conduct-performance approach. So, predicting the performance of an industry in terms of profitability and advertising growth can predict consumer consumption in possible. The structure of an industry covers factors like the relative and size of firms, involved the ease of entry into the industry and the elasticity of demand for the output of that industry. The conduct of firms covers the objectives of the firms, price setting behavior, and attitudes to competitors ( actual and potential), and from that the performance of that industry predicted, particularly in respect of profitability. What are the main features of the structure of an industry? Many consumption psychologists discuss on the structure-conduct-performance topic, the number and relative size of the firms and the extent of barriers to entry into the industry to influence the product suppliers to consumption choices in the market. The number and relative size of firms is usually placed under either the size distribution of firms or individual concentration. Most industries don't fit into the category of a large number of small firms or of one firm. Barriers to entry into an industry comprise all the factors which lead to new entrants into the industry being at a disadvantage to the existing firms because consumers have more choices to buy the similar products from the competitors . The first factor is the existence of economies of scale which means that a new entrant would have to produce on a relatively large scale increasingly. The second factor, the brand of products are supplied by a significant amount and thereby depressing price a significant amount, differentiation and advertising, so that a new entrant has to incur costs to overcome the loyalty of consumers to existing products. A third factor is the ability of existing firms to produce and distribute at lower costs than new entrants. Although, for example, access to cheaper new materials, accumulated knowledge of the industry etc. So, these external marketing environment factor will influence consumption behavior choices. For example, if the industrial structure determines or influences performance, the governments concerned with aspect of industrial performance ( particularly aspects like price changes, technological progress and employment levels).Consumption psychologists have often been assigned that the level of concentration in an industry is largely technological determined and that increases in concentration reflect impact of technological advance with increase the desired size of factory or firm. For example, mobile phone manufacturing industry, if the brand of mobile phone manufacturer had technological advance to manufacture any new model to attract consumers have more buying choices from their mobile products. Then, technological factor will influence consumers have more choices to buy the brand of mobile phone products. Other some psychologists believe the way in which unit costs change with the scale of production ( cost conditions and economies of scale ) factor which can influence consumers choice behaviors. When public policy favor active industrial intervention to change industrial structures, some indication is required as to whether the minimum efficient scale is small or large relative to the total market to supply their product numbers to influence consumers' behaviors. In the former case a policy favoring small units would be indicated, whereas, in the latter case large units may be favored.

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