Consumer sovereignty is a theory that states the fact that consumers have the power to
determine which products or services are actually produced in a given economy.
It is an idea that places the customer’s preferences in the centre of the product
Consumer sovereignty is the idea that it is consumers who influence production decisions.
The spending power of consumers means effectively they ‘vote’ for goods.
Firms will respond to consumer preferences and produce the goods demanded by
Limitations of Consumer’s Sovereignty
1. Unequal Income Distribution
consumer’s sovereignty is a myth
2. Availability of Goods
3. Combined Choice
4. Consumer not Rational
5. Society’s Customs
7. Standardised Goods
8. Advertisement and Propaganda
10. Government Restrictions
Consumer behaviour is the study of how individual customers, groups or
organizations select, buy, use, and dispose ideas, goods, and services to satisfy
their needs and wants. It refers to the actions of the consumers in the
marketplace and the underlying motives for those actions
Approaches to the Study of Consumer Behaviour
The theory of consumer’s behaviour seeks to explain the determination of consumer’s equilibrium.
Consumer’s equilibrium refers to a situation when a consumer gets maximum satisfaction out of his
A consumer spends his money income on different goods and services in such a manner as to derive
Once a consumer attains equilibrium position, he would not like to deviate from it.
Economic theory has approached the problem of determination of consumer’s
equilibrium in two different ways:
(1)Cardinal Utility Analysis and
(2)Ordinal Utility Analysis Accordingly
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