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Consumer sovereignity (1).pptx

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Consumer sovereignity (1).pptx

  1. 1. Theory of Consumer Behaviour
  2. 2. 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 development funnel. 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 consumers.
  3. 3. 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 6. Fashions 7. Standardised Goods 8. Advertisement and Propaganda 9. Monopoly 10. Government Restrictions 11. Taxation
  4. 4. What is Consumer Behaviour?
  5. 5. 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
  6. 6. 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 given resources.  A consumer spends his money income on different goods and services in such a manner as to derive maximum satisfaction.  Once a consumer attains equilibrium position, he would not like to deviate from it.
  7. 7. 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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