Definition: 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 center of the product development funnel.
What Does Consumer Sovereignty Mean?
This term was coined by a an English economist named William Harold Hutt in his book Economists and the Public, published in 1936. The concept developed by Hutt puts consumers in the center of businesses’ product and services development decisions. In his view, consumers are the final authority to determine which goods are the most suitable to fulfill their needs and that is the reason why their decisions, preferences and habits should be the starting point of any new invention.
This statement seems logical, but some scholars have pointed the fact that marketing efforts can influence consumer’s decisions in a way that might create an inclination to purchase the product after being exposed to advertisements. Therefore, consumer sovereignty does not apply in all cases, but the fact that the economy is mostly consumer-driven is considered a true statement. Finally, free markets are said to possess a higher degree of consumer sovereignty than heavily regulated ones.
Example
Top Jeans Co. is a company that manufactures men clothing. The company’s main products are casual jeans and the Creative Department is currently working on a new line for summer. The Marketing Department recently conducted a market research project to be more familiar with the company’s target audience and the study demonstrated that 65% of men who bought jeans weighted more than 200 pounds (90kgrms).
This information confirmed the data provided by the Sales Department where sizes L and XL were the best sellers. By incorporating this information into the designing process the company will place its customer’s preferences and actual needs at the center of their product development process.
