Consumer Sovereignty is the economic concept that the consumers have enough power to control the product or service being produced. They know exactly what they need before the producer. In response, the producer will make the product or service base on the consumers’ needs.
The consumers determine the product features which should be included in the products. They have a strong influent on the producers and even can put pressure on the producer to make the product or not.
Consumers have the purchasing power and the powerful influence over the suppliers’ production. However, the great invention produces something that the consumers do not what they want. The producer makes something new to the market and they run a successful marketing campaign. As a result, the customers will purchase such new products. In this case, the producer has significant influence over the consumers. For example,
Advantages of Consumer Sovereignty
|Advantages of Consumer Sovereignty|
|Initiate the competitive market||The suppliers will be looking to fill the consumers’ demand. They will try to target all needs so it will lead to competition. As the result, consumers will have more choices.|
|Motivate the innovation||It is a matter of innovation. The market share will fall to anyone who listens to consumers and innovates something new.|
|Save on marketing||When producers listen to the customers, they will know exactly what is demanding. So it will help to save the marketing budget in launching a new product.|
Limitation of Consumer Sovereignty
|Limitation of Consumer Sovereignty|
|Not enough resource||The producers cannot produce everything that the consumer want. There is the limited resource which prevents producer to produce enough product for customers.|
|Technology||The producers may not be able to satisfy the consumers due to the technology advancement. For example, a flying car is something that consumers need for years. However, the producer cannot make it happen yet due to the limitation of the technology.|
|Monopoly Power||The suppliers may not care about the consumer’s needs as they are the only option available.|
|Individual Demand||The producers cannot address all individual needs, they are too much to handle. They can only respond to the combined need which is similar.|